> For the complete documentation index, see [llms.txt](https://docs.xft.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.xft.finance/learn/bonds-v-loans.md).

# Bonds v Loans

<mark style="color:red;">WHY INVEST?</mark> MAKE $$.&#x20;

<mark style="color:red;">WHY STOCKS?</mark> MAKE DIVIDEND $$ OR BUY LOW SELL HIGH.

<mark style="color:red;">WHY FIXED INCOME?</mark> MAKE COUPON $$, LESS BUY LOW SELL HIGH. "SAFER"

SIMILARITIES

* LENDER = INVESTOR
* BORROWER = DEBT INSTRUMENT ISSUER
* BORROWER RECIEVES $$$ FROM LENDER
* BORROWER PAYS INTEREST TO LENDER
* BORROWER RETURNS PRINCIPAL TO LENDER
* INTEREST OR NO INTEREST, FIX OR FLOATING RATE
* TERM + CORP ACTION NUANCE
* BDC = EQUITY&#x20;
* CLO = EQUITY&#x20;
* CLO TRANCHE = EQUITY W/ SPECIFIC RISK/RETURN PROFILE, LOAN EXPOSURE
* CDO = SUBPRIME MBS, MORTGAGE DEFAULT
* CLO = SUBPRIME BANK LOANS, CORP DEFAULT

DIFFERENCES

* <mark style="color:$danger;">??</mark>
* LOANS CAN BE SECURED?&#x20;
* BOND TERMS SET BY BANK DCM TEAM
* BOND PRIMARY MKT DISTRIBUTION BY SYNDICATE TO MULTIPLE INVESTORS
* LOAN DIRECT DISTRIBUTION BORROWER <> LENDER?
* BANKRUPTCY REPAYMENT PRIORITY (LEGAL CAP STRUCT CLASSIFICATION)
* REFINANCING / ROLLING?&#x20;
* PIK?&#x20;

***

RESOURCES

<https://www.citi.com/personal-loans/learning-center/basics/bond-vs-loan>

<https://www.guggenheiminvestments.com/perspectives/portfolio-strategy/understanding-collateralized-loan-obligations-clo>

<https://usmutualfunds.rbcgam.com/us/article/evaluating-loans-vs-bonds/detail>

<https://www.americanexpress.com/en-us/credit-cards/credit-intel/collateralized-loan-obligation/>

<https://www.investor.gov/introduction-investing/investing-basics/investment-products/closed-end-funds/publicly-traded-business-development-companies-bdcs>

<https://corporatefinanceinstitute.com/resources/financial-modeling/capital-stack-structure-debt-equity/>

<https://www.invesco.com/il/en/insights/why-clo-equity-now.html>