Published Aug 11, 2023 A bondholder is an investor who owns a bond issued by a company or government. That means they are the lender in a bond transaction and the issuer of the bond is the borrower. In exchange for lending their money, bondholders receive regular interest payments and the principal amount of the bond when it matures. To illustrate this, let’s look at a company that needs to raise money to finance a new project. To do so, they decide to issue a bond with a face value of $1,000 and a coupon rate of 5%. That means the bondholder will receive $50 in interest payments every year and the full principal amount of $1,000 when the bond matures in 10 years. Now, let’s assume the company is successful and the bondholder decides to hold the bond until maturity. In that case, the bondholder will receive a total of $500 in interest payments and the full principal amount of $1,000 when the bond matures. Bondholders play an important role in the financial markets. By lending their money to companies and governments, they provide them with the necessary capital to finance their projects. This, in turn, helps to create jobs and stimulate economic growth. In addition, bondholders also benefit from their investments, as they receive regular interest payments and the principal amount of the bond when it matures.Definition of Bondholder
Example
Why Bondholders Matter
Financial Economics