Benchmark Bond


DEFINITION of 'Benchmark Bond'

A bond that provides a standard against which the performance of other bonds can be measured. Government bonds are almost always used as benchmark bonds. Also referred to as "benchmark issue" or "bellwether issue".

BREAKING DOWN 'Benchmark Bond'

More specifically, the benchmark is the latest issue within a given maturity. For a comparison to be appropriate and useful, the benchmark and the bond being measured against it should have a comparable liquidity, issue size and coupon.

  1. Maturity

    The period of time for which a financial instrument remains outstanding. ...
  2. Liquidity

    The degree to which an asset or security can be quickly bought ...
  3. Coupon

    The interest rate stated on a bond when it's issued. The coupon ...
  4. Bond

    A debt investment in which an investor loans money to an entity ...
  5. Bond Equity Earnings Yield Ratio ...

    A metric used to evaluate the relationship between bond yields ...
  6. Benchmark

    A standard against which the performance of a security, mutual ...
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