Issuer

When you buy a bond, you are lending money, and the issuer is who you are lending to: a national government (in the United States, the Treasury), a state or city, a federal agency, or a company. The issuer promises to pay interest on a set schedule and to repay the face value, the amount stated on the bond, on the maturity date.

Say a bond has a $1,000 face value, a 3 percent coupon (the yearly interest rate paid on the face value) and ten years left. The issuer pays $30 a year and returns the $1,000 at the end if the issuer pays as promised.

The issuer matters because every payment depends on it. An issuer can fail to pay, which is called a default, so issuers seen as riskier usually offer higher interest.