Glossary of Financial Terms

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144A Bond

This bond is a private placement offered in the United States without the formal approval of the Securities and Exchange Commission (SEC). It is sometimes called “Rule 144A Bond.” It was established in 1990 and has been made available to both the U.S. and foreign companies. It supports high-risk companies in borrowing money. There are specific requirements that bond buyers must satisfy to purchase the 144A bonds. Those who meet the requirements are collectively called “Qualified Institutional Buyers.” These are the only institutions that can buy Rule 144A bonds.  144A bonds usually carry a higher yield than other similar public bonds because issuers of 144A bonds are generally of lower credit quality.

For basic understanding of bonds, see “Bond,” “Coupon Payments” and “Face Value.”  Also see “Yankee Bond” and “SEC.”