A bond is a recognition of debt. The State, some public sector entities and major corporations issue bonds. The borrowers, promise to pay annual interest when bonds are issued.




Occurs when a creditor is paid back the sum borrowed. Assess for collection: ask for a receivable to be paid.


In the past, a coupon was a piece of paper that would be detached from the security in return for payment of interest accrued, a dividend or during another transaction (to prove that the bearer had traded in the coupon). Now that securities are paperless, the coupon refers to bond interest or share dividends. Coupon payment: payment of interest or dividend.




Any sum of money borrowed by an individual or legal entity (debtor) that must be paid back to another individual or legal entity (creditor). Until the debt matures, the debtor will pay the creditor interest (coupon) at an agreed rate every year on an agreed date.
Debt amortisation

Payment of amounts due when a security reaches maturity.
Synonyms: redemption; for the creditor: collection.


Delivery consists of handing over securities to the buyer following a financial transaction or trade.


A financial institution with authorised as a bank where bearers deposit their securities. The depository must know at any time who owns what, the status of securities (unrestricted, loaned, borrowed or pledged), and where the securities are held. Since the move to paperless transactions, depositories for securities consist of computer memories; they are secure and backed up on a regular basis. Handling electronic securities is immeasurably faster, more flexible and cheaper than handling paper securities was.



Interest rate

Percentage used to calculate the bond coupon, expressed as a percentage. The interest rate is established when the bond or loan contract is issued. It can be fixed or variable. If excessive, it is deemed “usurious”.
Interest: sum paid annually to a bondholder by the issuer up to maturity.



Lead book runner

When a syndicated bond is being issued, the banks that prepare the bond, collect orders, allocate the bond based on supply and demand and set the price are known as lead book runners. There are also co-lead book runners, who have fewer responsibilities, and other members of the syndicate. Both participate in the bond issue, but to a lesser extent.

Legal tender

Currency is legal tender if it can be used in exchange for goods or services, or to pay taxes and duties in a certain geographic area. The euro is legal tender in 19 European countries and Montenegro.


A financial instrument or market is said to be liquid when buy and sell transactions can be carried out without triggering excessive variations in price.


Sum of money lent by a creditor temporarily to a debtor.
Synonyms: borrowings, credit; from the lender’s viewpoint: receivable, asset; from the borrower’s point of view: debt, liability.




Market maker

Market makers are spot market operators who supply a price whenever they are contacted, regardless of the market situation.


Redemption date established when a loan agreement is signed.
Synonym: redemption date.



Yield curve

The yield curve illustrates the relationship between interest rates at different maturities. The curve is generally upward sloping due to the existence of a risk premium (long rates higher than short rates). However, the curve can slope downward if, for example, a dip in inflation is expected.



A call option gives the holder the right to buy an asset at a fixed price at a point in the future up to a certain date. A put option gives the holder the right to sell the same asset under the same conditions. Tradable options are contracts that can be exchanged on the regulated markets.


Par value

Face value of a bond or security. A company’s share capital is €X million divided into N shares with a par value of X/N euros. A bond has a par value of N euros: all Treasury securities have a par value of one euro.
Par bonds have a fixed rate of interest in contrast to index-linked bonds.


Sum of money equivalent to the market value of a good or service. The price is set by the interplay of supply and demand. Bond prices vary inversely to bond yields.

Primary market

The primary market issues new securities. It is the market for capital increases and bond issues. Compared to the secondary market, which sells “second-hand” securities, the primary market sells only “new” ones.


Value of a bond less the coupons.



Assessment by agencies specialising in rating the soundness of corporate financial statements and financial instruments issued by an economic agent.
Rating agency: company specialising in corporate credit ratings, i.e. in awarding scores based on the state of the corporate accounts or financial instruments issued.


Risk is the possibility, which is never zero, of losing all or part of an asset or its equivalent monetary value. Risk is at the very heart of financial activity: evaluating, spreading, assuming and hedging risk are all tasks that result in payment for a financial transaction. The price of a bond indicates the degree of risk incurred by the buyer. The riskier a particular transaction is, the more the collateral required will increase.
Counterparty risk
The risk that the buyer will not pay for what he or she has purchased, that the seller will not deliver what he or she has sold, that the borrower will not repay his or her loan or that the lender will not supply the loan funds promised (and for which he or she has received guarantees). Also called default risk.


Secondary market

The secondary market is the market for securities already in circulation (created on the primary market). By ensuring investments remain liquid, the secondary market guarantees the quality of the primary market and the valuation of securities. Primary and secondary markets are therefore highly complementary.


An investment unit, currently stored in electronic format in France.

Securities transactions

This term covers all actions carried out during a security’s lifetime. For bonds, this mainly concerns coupon payments, i.e. the interest on the securities owned. For equities, this concerns paying dividends or stock splits, for example. Both bonds and equities may be exchanged for another type of security.


For financial trades and transactions, settlement consists of a payment by the buyer or subscriber to the seller for the securities acquired and delivery of the securities by the seller.

Stripping bonds

Stripping is a technique that divides a bond into as many securities as there are coupon and redemption payments. The stripped bonds created in this way are sold and listed separately as zero-coupon bonds. There is specific demand for this type of instruments, called strips, on French securities markets.


Group of banks that organise and oversee a large bond issue. It comprises lead book runners, co-lead book runners and associated members.


In principle, syndication means that a bank or a syndicate of banks buys all the securities to be placed with the public from the issuer. This is the preferred placement method for corporate issuers. Syndication was favoured by the French Government up until 1985.


Interest rate swaps are based on the comparison of a variable and fixed interest rate. At maturity, one of the counterparties must pay the difference in interest to the other without any exchange of principal. They are particularly suitable for hedging long-term risk within a company. The market for swaps has seen considerable growth and the banks play a key role in market-making. Corporate treasurers like the flexibility offered that enables them to choose the duration, benchmark variable interest rate and the notional value. A swap between a bank and a company can be settled at any time by calculating the present value of the future fixed-rate flows at the market rate and comparing this to the initial notional value. Swaps are also used on a regular basis to hedge the interest rate risk on variable- or fixed-interest rate assets.



The daily CNO-TEC N index, with a constant maturity of N years (N is between 1 and 30), represents the yield to maturity of a fictitious OAT with a maturity equal to N. The yield to maturity is obtained by extrapolating the annual yields to maturity of the two OATs with maturities closest to N.


A stock market transaction involving the exchange of a certain quantity of a given security at a certain price between two parties represented by a financial intermediary (investment company). The trade is time-stamped on Euronext. It then goes through clearing, settlement and delivery. Synonyms: transaction, exchange, market.


A stock market operation involving the exchange of a certain quantity of a given security at a certain price between two parties represented by a financial intermediary (investment company).
Synonyms: trade, exchange, market.





An interest rate that is not constant throughout the duration of the loan, but which changes depending on outside factors, such as market rates (Euribor, Eonia) or statistical indices.

Volatility (bond)

Bond market volatility is mainly related to the interest-rate risk that almost only affects fixed-rate bonds, with very few exceptions. The price of a bond varies inversely to the market interest rate. Sensitivity is even greater when the par value and the market interest rate are low.