Can you tell me in detail the principles of premium issuance and discount issuance of bonds?

1. Principle of bond premium issuance

1. Bond premium issuance is affected by market interest rates. When the coupon rate of a bond is higher than the prevailing interest rate in financial markets, that is, the market interest rate, the bond will have a premium.

2. Bond premium issuance is affected by the bond redemption period. The closer it is to the redemption period, the more money will be paid to purchase the bond, and the higher the premium will be.

2. Principles of Discounted Issuance

1. Issuers with low credit or new bond issues adopt discounted issuance to ensure smooth promotion of bonds;

2 . The number of bonds issued is large. In order to encourage investors to subscribe, additional income subsidies are provided in the form of price reductions;

3. Since the market interest rate has increased and the bond interest rate has been fixed, in order to ensure issuance, only Can lower the issuance price. When a bond is issued at a discount, since the issuance price of the bond is lower than the face value, the investor's yield is greater than the coupon rate of the bond, so the coupon rate of the bond issued at a discount can be appropriately reduced.

Extended information

When stocks are issued at a discount, the size of the discount must be determined based on the company's economic conditions. If the business conditions are good, the discount will be less, and if the business conditions are good, the discount will be more. Discount issuance is suitable for stocks issued by companies with lower creditworthiness or newly established companies.

In addition, when issuing large quantities of stocks, in order to attract investors, they are issued at a discount to facilitate promotion. Many new companies in the West often issue shares at a discount. The corporate laws of Japan and some other countries stipulate that the issuance price of stocks must not be lower than the par value. Therefore, there is no phenomenon of issuing stocks at a discount in these countries.

Baidu Encyclopedia-Premium Issuance

Baidu Encyclopedia-Discount Issuance