Syndicate
Types of Bonds
We can also classify commerce bonds according to the public or private character of the issuing entity:
Public bonds: in these bonds, the issuing entity is public (city hall, state, autonomous communities, public companies, etc.). The public debt of the state, debentures official credit entities or any other official organisms and Treasury bonds, are examples of public bonds.
Private bonds: are bonds issued by private companies. For example, stocks from private companies are private commerce bonds, participation in individual funds, promissory notes of a company and credit entities.
Commerce bonds can also be classified in relation to the material formula employed:
Documental formula: the rights are subscribed in a document
Registering formula: are non-material rights and are controlled through computing systems.
Since the late 1980s, the possibility to represent securities by recording in the accounts was introduced. In this way securities can be represented through commerce bonds or by recording them in accounts. In the first case, they are called securities, and in the second case, they are called rights-securities.
The recording-in-accounts system started to work with public debt. For that, those who bought public debts and have rights over the issuer (in this case the State) accounted in a recording central can open accounts in financial entities that, at the same time, can keep third party notes, therefore can manage not only their own portfolio, but those of their clients, too.
Another commerce bond classification is that that is done based on how the bond bearer is classified.
Nominal commerce bonds: are those that are issued in favor of a specific person. In case of transfer it must be notified to the issuing company.
Bearer commerce bonds: the bearer is the owner of the commerce bond.
Draw-on commerce bonds: they are issued to a specific person who has the right to transfer it to any other person without having to notify the debtor. Promissory notes are a good example of this type of security.
As to contract securities are usually divided into the following groups:
Public funds: also called public “effects”, which are state debentures, state bonds and any other debt issued by the state or by public institutions.
- Debentures
- Stocks
- Short-term financial assets: essentially promissory notes.
The first three types of commerce bonds or securities (stocks, debentures and public debt) are contracted by markets known as “market of capitals.” On the other hand, short-term financial assets (basically promissory notes) are traded in the “money market.”
Currently, the great increase of new financial tools makes the limits between money markets and more lavish markets of capital.