Bond Issuance

At issuance, a borrower sells a new bond to raise money. The sale creates one security. That security is the issue. The issue fixes the terms that define the borrower's debt:

• Issuer. The borrower of the money. It promises to pay interest and to repay the principal.
• Currency and face value. The currency of the debt and the principal the borrower repays. A trade of the bond is sized as a notional in the same currency, but the face value belongs to the issue, not to any one trade.
• Coupon. The interest the borrower pays. The coupon structure can be fixed, floating, zero-coupon or amortising, per the coupon leg of the bond's specification.
• Schedule. The coupon payment dates, the calendar and the day-count convention that fix each payment amount.
• Dates. The issue date and the maturity date, when the principal is repaid.
• Features. Rights that alter the cash flows. A callable issue lets the issuer redeem early at set prices on set dates. A convertible issue gives the holder the right to convert into shares. The call schedule and the conversion right belong to the issue.

The ISIN names the issue. One issue has one ISIN, and one ISIN names one issue. When a borrower needs different terms, it issues a new bond, which is a new issue with a new ISIN. The terms of an existing issue stay as they were fixed at issuance.

An ISIN identifies the security rather than the listing, so the same ISIN appears on every venue where the issue trades. A re-opened tranche carries the ISIN of the line it joins, which is why an ISIN names a security and not a single sale event. Standard financial identifiers covers the scheme, along with CUSIP and SEDOL, which form the national identifier inside a United States or United Kingdom ISIN respectively.

An issue is a security. A trade is an event on the security. The two carry different facts:

• The issue carries the terms. They describe the debt itself.
• The trade carries the event: the parties, the price, the quantity, the trade date and the settlement.
• A position carries a holding: which party holds how much of the issue at a point in time.

Many trades can reference one issue. Each trade can be at a different price. The terms of the issue are the same for all of them.

ORE's bond trade forms reference the issue by SecurityId, typically the ISIN with the ISIN: prefix. The short form of a trade names the issue and reads the terms from reference data. The long form inlines the terms in the trade. Either way, the trade is on the issue, not on a copy of it. Every product page of the bond family grounds on the issue in this way: see the links below.

A borrower raises money by issuing one bond with one set of terms, for example a 4% coupon paid yearly, maturing in ten years. From then on, every trade of that bond is a trade of that same security. The coupon, the maturity and the ISIN do not change because the bond changes hands. What differs between trades is the price, the size and the parties.

• Bond. The cash bond trade; the issue is the bond itself.
• Forward Bond. A forward contract on the issue, with the terms inlined.
• Bond Forward (Reference Data). A forward contract on the issue, read from reference data.
• Callable Bond. The issue carries issuer call and investor put rights.
• Convertible Bond. The issue carries the right to convert into shares.

• Bond Position. A position in a weighted basket of issues.
• Bond Future. A contract to buy or sell the issue at expiry.
• Bond Option. A right on the issue, with the terms inlined.
• Bond Option (Reference Data). A right on the issue, read from reference data.
• Bond Total Return Swap. A swap paying the total return of the issue.
• Bond Repo. A cash borrowing with the issue posted as collateral.
• Ascot. A structured product whose underlyings are issues of convertible bonds.
• Standard financial identifiers. ISIN, CUSIP and SEDOL, which name the issue, alongside the entity, venue and market data schemes.
• Knowledge. The hub of all knowledge notes.