In short
- A bond is a loan to a state, an institution or a company.
- The issuer pays interest, called a coupon, then repays at maturity.
- Its price can change before maturity, especially when interest rates change.
A loan split into securities
When an issuer needs money, it can borrow from many investors by issuing bonds. Each bond shows an amount, an interest rate and a repayment date. The person holding it is a lender, not an owner.
In Morocco, Treasury bills are the debt securities issued by the state. Companies and institutions also issue bonds, and some are listed on the Casablanca Stock Exchange.
Share or bond: the differences
| Share | Bond | |
|---|---|---|
| You are | A part-owner | A lender |
| Income | Dividend, if voted | Coupon, set by contract |
| Duration | No end date | Maturity date |
| In bankruptcy | Ranks after lenders | Ranks before shareholders |
Why the price falls when rates rise
A made-up example: you hold a bond that pays 3% a year. If similar new bonds then pay 4%, fewer buyers want yours. To sell it before maturity, its price will have to fall. On the other hand, if rates fall, it becomes more attractive and its price can rise.
This is why central bank decisions matter. See our guide to the policy rate, inflation and the stock market.
The risks of a bond
- Credit risk: the issuer may fail to pay interest or to repay.
- Interest rate risk: the price can fall if you sell before maturity.
- Liquidity risk: it can be hard to find a buyer quickly.
- Inflation: if prices rise faster than the coupon, purchasing power falls.
How individuals get access
Direct access goes through an intermediary, and minimum amounts depend on the security. You can check the conditions with your bank or brokerage firm. Many individuals are exposed to bonds through bond funds.
Tax is not the same as for shares: the AMMC publishes a page on this, to be read with the current General Tax Code.
Frequently asked questions
Is a bond risk-free?
No. The risk depends on the issuer and the duration, and the price can fall before maturity.
What is a coupon?
It is the interest paid to the bondholder, according to the agreed rate and schedule.
This article is for information and educational purposes only. It is not investment advice or a recommendation to buy or sell any security. Investing in shares involves a risk of capital loss. Check figures against official sources (Casablanca Stock Exchange, AMMC) and consult a licensed professional. Read the full disclaimer.
