What Is an Index-Linked Bond?

Index bonds are corporate bonds that guarantee that creditors will not suffer losses due to rising prices by linking interest rates to inflation rates.

Index bond

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Index bonds are corporate bonds that guarantee that creditors will not suffer losses due to rising prices by linking interest rates to inflation rates.

Chinese name

Index bond

By

Interest rates are linked to inflation

Also known as

Commodity-related bonds

Use to

Index of interest is not linked to inflation

The linking method is usually: bond interest rate = fixed interest rate + inflation rate + fixed interest rate * inflation rate. Sometimes the index used to calculate interest is not linked to inflation and is linked to a specific commodity price (oil price, gold price). This type of bond is also called a commodity-related bond.