A bond is a debt investment in which an investor loans money to an entity which borrows a fund for a defined period of time
at a variable or fixed rate interest.
It is similar to debentures but the key difference is that it is issued by a government institute.
Following are the different types of the bonds
1) Corporate Bonds - A corporate bond is a debt security which is issued by a company and sold to the investors.
 Company‟s assets are may be used as collateral in some cases.
 The backing for the bond is usually depending upon the payment ability of the company.
 The corporate bonds have considered higher risk than governmental bonds.
2) Convertible Bonds- A convertible bond is a debt security that can be converted into predetermined amount of underlying
company‟s equity. Convertible bonds are issue to avoid the negative impression of company‟s actions.
3) Callable Bonds- Callable Bonds are also known as “redeemable bonds” as the bonds are redeemed prior to the period of
maturity.
4) Term Bonds- A term bonds are the bond which mature and come due on single date. A term bond possesses all the
features of callable bonds.
5) Government Bonds- Government Bonds are those bonds which are issued by the government to support government
spending. These bonds are more secure than corporate bonds.

Following are Some Other Important Bonds
1) Masala Bond
Masala Bonds are the rupee denominated borrowings by Indian entities in overseas market. The word “Masala” is given by
the IFC (International Finance Corporation) to represent Indian culture and cuisine. First Masala Bond was issued by the IFC
(International Finance Corporation) when it raised Rs 1000 crore bond to fund infrastructure projects in India.

Issuers of Masala Bonds

 RBI has issued guidelines allowing following entities to issue rupee denominated bond overseas.
 Indian Companies (Blue Chip Companies)
 NBFCs ( Non Banking Finance Companies)
 Infrastructure Investment Trust
 Real Investment Trust
Benefits to Investor
 By investing in Masala Bonds, the investor gets tax deduction on interest income.
 Capital gains from rupee appreciation are exempted from tax.
Benefits to Indian Companies
 If the issuer, issues bonds in rupees, then he gets rid of risk of currency fluctuation.
 The bonds bring new and diversified set of investors for Indian Companies.
Regulator of Masala Bonds:
As the Masala bonds are Indian Rupee denominated bonds, it is regulated by the Reserve Bank of India.

2) Green Bonds
A Green Bond is a tax-exempt bond which is issued for the investment in the green projects or for the development of
Brownfield sites.
Brownfield Sites are the sites which are underutilized, have abandoned buildings or underdeveloped.
 Issuers of Green Bonds: Green Bonds are issued by following multilateral agencies:
 World Bank
 Corporation
 Government agencies
 Municipalities
Purpose
Green Bonds are issued to encourage sustainability and development of Brownfield sites. Specifically it finance projects
aimed at energy efficiency, pollution prevention, sustainable water management etc.
Regulator of Green Bonds:
In India Green Bonds are regulated by SEBI (Securities Exchange Board of India).

3) Junk Bonds
Junk Bonds refer to high yield or non-investment grade bonds. These are named as junk bonds as it involves high rate of risk
in relation to investment bonds. It is fixed income instrument that carry a credit rating lower by Moody‟s investor services.
Investor demands high yield bonds as it yields high rate of return which in turn a compensation for their investment.
Regulator of Junk Bonds:
In India Junk Bonds are regulated by SEBI (Securities Exchange Board of India)