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What is a Bond Circular?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 28 August 2016
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A bond circular is essentially a bond offering that is put together by an underwriter or a group of underwriters. Designed as a document describing a bond offering in detail, the purpose of the bond circular is to attract the attention of potential investors, by providing all the basic information about the nature of the offering.

Bond circulars include essential details that will help the investor know whether the offering is one that is worth further investigation. The typical bond circular will include the name of the issuer of the offering, and possibly some supporting documentation about the background and reputation of the issuer. This information can quickly help an investor to determine if this is a deal worth consideration, since the reputation of the issuer is likely to figure prominently in the future performance of the offering.

Along with basic information about the issuer, the bond circular will also address the size of the offering. Investors that consider the offering size to be sufficient can choose to look into the offer in more detail. Others who are not interested in an offering of the specified size can simply ignore the bond circular and seek investment opportunities elsewhere.

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The remaining common details included in a bond circular are the coupon, maturity, redemption specifics, and the offering price. These remaining factors can help the investor to grasp the amount of the immediate investment, and project when and how much of a return can be realized from the investment over a given period of time. Depending on the anticipated rate and amount of return, the investor may determine that the offering price listed on the bond circular is not justified by the potential profits indicated by the information provided.

Investors who receive information via a bond circular usually make it a point to double check the veracity of the information included on the circular. By researching the details thoroughly, it is possible to determine that the offering cited in the bond circular is a good investment, and has an excellent chance of yielding a decent return.

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