Are issuers selling a portion of their borrowed money to the public as bonds? If so, how does a public price increase for a bond happen? Also how do issuers make profit off of their publicly sold bonds?
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In a modern bond offering, the actual entity that pays the company the money they’re borrowing is called the *underwriter*. The underwriting company negotiates the initial interest rate of the bond offering, i.e. the payment structure the company will have to manage over the maturity of the bond for the bondholders. They give the money (less fees) to the borrower, then sell the bond on the open market. The underwriter takes risk in this operation, but generally make a profit on the IPO.
Once the bond is in the open market, it can be bought, sold, or used as collateral just like any other security. A bond holder buys (to hold) the security because they think the bond will be paid in full, and they will receive the expected income over the maturity of the bond. A bond trader speculates on the floating interest rate expected to be received by the fixed income, buying the bond if income is relatively high to the price of the security, or selling if the price of income is relatively low to the price of the security.
Bond are highly standardized contracts in the modern world, so underwriters need to follow strict regulations about the nature of the contract if they are to bring them to market. A bond that is not defined according to the standards of the marketplace won’t make it to market. I.e. a contract that gives the borrower the right to default without recourse for the bondholder isn’t marketable. The underwriters carry the liability here, as they’re the ones selling the security.
There may be examples of a company going direct to market with a bond offering (no underwriter), but not in U.S. history as far as I’m aware.
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