Bonds Trading
Take a position on markets like UK Long Gilt, Euro Bund and US T-Bond, all featuring tight spreads.
Spread Bet or Trade CFDs on UK, US and European bonds and take advantage of deep liquidity in Bond markets.
- Spreads from just 0.02 points
- Range of 12 Bond markets
- Awarded Best Spread Betting Provider 2019 by OPWA‡
Trade 12 Global Bond Markets
Trade wherever you are, on our fast, reliable platforms
Customisable charts
Award-winning platform
Actionable trade ideas
Trade anytime, anywhere

Spread Betting and CFD Trading
City Index offers Spread Betting and CFD Trading on Bonds. Typically UK investors choose
Spread Betting because any profits are free from UK Capital Gains Tax (CGT)*.
Spread Betting
Best for
Tax-free trading in UK*
Trade type
£ per point
Tax
No UK Capital Gains Tax (CGT)
or Stamp Duty*
Trade on
Global Indices, FX, Shares,
Commodities & more
Commission
Commission free
Platform
Web, mobile and advanced platforms
CFD Trading
Best for
Hedging
Trade type
Buy/sell CFDs
Tax
No UK Stamp Duty. You do pay UK CGT but losses can be offset against tax*
Trade on
Global Indices, FX, Shares,
Commodities & more
Commission
Share CFDs only
Platform
Web, mobile and advanced platforms
Why City Index?
City Index
Why Trade Bonds?
How to trade Bonds
Bond markets offer traders deep liquidity with a high volume of trades placed daily. They underpin the global financial system and allow traders to diversify their investment portfolio.
Because Bond markets are driven by economic performance and geopolitical risk, careful analysis and an understanding of the markets can help identify trading opportunities. If you think a Bond market will rise in value you can buy or go long on that market. If, however, you think the price of a market may fall, you can sell or short that market.
With City Index you can trade Bonds with a Spread Betting or CFD Trading account.
Learn to Trade Bonds
How to analyse markets
How to identify trading opportunities using our research tools
How to manage risk
Learn techniques to improve your trading and manage risk effectively
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What are Bonds?
Governments and companies frequently need to raise finances in order to finance new investments and projects. Rather than taking a loan, they can issue bonds.
A bond is a debt investment where an investor loans money to a company or Government for a defined period of time for at an agreed interest rate.
They are different from shares because they pay interest and do not provide a stake in the issuing organisation.
How Bonds work
Investors lending to governments or companies can buy the bond and in return every year the bond will pay interest. This is often referred to as the coupon.
Bonds have a maturity date – this is the date when the government has to pay back the principal, the original amount it borrowed. Government bonds are issued with a range of maturity dates, from short term bonds to those which have a 30-year lifespan.
Bonds are debt securities which can be traded amongst investors. The market price of the bond will depend on a number of factors including the credit rating of the issuer, the length of time until maturity and the coupon rate compared to current interest rates. When someone sells a bond at a price lower than the face value, it's said to be selling at a discount. If sold at a price higher than the face value, it's selling at a premium.
Bond trading example
A 10 year bond is issued with a 6% coupon value. If interest rates were to rise to 7%, the 6% coupon value is below the current market rate and not an attractive option for investors. The bond price will decrease and will sell at a discount.
If interest rates were to fall to 3%, the bond will continue to pay at 6% and will be an attractive option for investors. The price of the Bond will increase and be sold at a premium.
How are Bonds issued?
Bonds are usually issued in a bond auction. Most government bonds are bought at auctions by primary dealers such as large banks and financial institutions. Buyers of bonds include banks, pension funds, foreign governments and individual investors.
Where are Bonds traded?
Corporate and government bonds can be traded publically on exchanges. They are often traded over-the-counter (OTC) – this means they are generally traded between dealers, acting on behalf of clients.
Government Bonds explained
Governments and companies frequently need to borrow money from the markets and do this in a number of ways. Rather than taking a loan they issue bonds, debt securities that can also be traded between different parties. They are different from shares because they pay interest and do not provide a stake in the issuing organisation. They are really pieces of a structured loan.
How Bonds work
Bonds are debt securities – governments and companies use them to borrow money to fund projects or expansion plans. Anyone lending to governments or companies can buy the bond and in return every year the bond will pay interest. This is often referred to as the coupon.
Bonds also have a maturity date – this is the date when the government has to pay back the principal, the original amount it borrowed. Government bonds are issued with a range of maturity dates, from very short term bonds to those which have a 30-year lifespan.
In addition, companies and local governments (municipalities) issue bonds. There are thousands of individual bonds issued on the market at any one time.
How are Bonds issued?
Bonds are usually issued in a bond auction. Most government bonds are bought at auctions by primary dealers like large banks. Buyers of bonds include banks, pension funds, foreign governments and individual investors.
Where are Bonds traded?
Bonds can be traded and the market for bonds is wide and diverse. Corporate and government debt is mainly traded in the over-the-counter (OTC) market – this means they are generally traded between dealers, acting on behalf of clients.
When someone sells a bond at a price lower than the face value, it's said to be selling at a discount. If sold at a price higher than the face value, it's selling at a premium.
Bond ratings
Independent ratings agencies exist to provide a rating to bond issues: a rating is an indicator of risk – how likely is it that a borrower will default and fail to pay the bond at maturity?
Only the most secure bonds attract the top ratings. Even large governments may only have AA or A ratings.
What is a junk Bond?
A junk bond is a much riskier, high yield bond, often issued to raise short term financing. These are not investment grade – i.e. the risk of default is considered much higher.
What drives bond prices?
- Demand for bonds on the part of long term investors, particularly institutions
- The supply of bonds – how many new bonds are coming onto the market
- Bond ratings, particularly if these are upgraded or downgraded
- Interest rates being paid by banks
- The state of a country’s economy, including how much it is borrowing, and whether the market thinks it will be able to pay its debts
- Whether the equity market is seen as too risky – historically, the bond market was regarded as a safer place to invest. This has changed since countries like Greece are in danger of going bankrupt
- How long a bond has to go before it is redeemed (the principal is paid back). This will influence the price, as investors will know how much more they can expect in terms of interest payments
Trading Bond markets with City Index
- City Index offers spread betting and CFD trading on bonds
- We offer competitive spreads on a range of bond markets, including US bonds, Euro Bunds, UK Gilts, Euro Schatz and US T-Notes and T-Bonds
- Our spreads for bonds start from just 0.02 points