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Banks are also key issuers in the bond market and they can range from local banks up to supranational banks such as the European Investment Bank, which issues debt in the bond market. There are four major types of bond classifications: corporate bonds, government bonds, municipal bonds, and mortgage-backed bonds.

By buying a bond, you're giving the issuer a loan, and they agree to pay you back the face value of the loan on a specific date, and to pay you periodic interest payments along the way, usually twice a year. Unlike stocks, bonds issued by companies give you no ownership rights.

On occasion, a company will buy back its own bonds before the maturity date, recognizing a gain or loss on the repurchase. Generally, this buyback is done with the intent to retire the bonds and get the liability off the company's balance sheet.

A company can retire its bonds early either by paying the call price for callable bonds or by purchasing its own bonds in the open market.

Utilising a bond buyback, a bond issuer may be able to retire a portion of their existing bond indebtedness at a discount to par. Depending on the level of the discount and the other potential uses for that liquidity, a bond buyback may therefore be a very efficient use of an issuer's excess cash.

Utilising a bond buyback, a bond issuer may be able to retire a portion of their existing bond indebtedness at a discount to par. Depending on the level of the discount and the other potential uses for that liquidity, a bond buyback may therefore be a very efficient use of an issuer's excess cash.

Unless there is a specific contractual requirement to cancel bonds that are acquired, in most cases an issuer should be free to acquire bonds, hold and then re-sell them. It is also worth remembering that any re-sale by an issuer must comply with an exemption from registration under the US Securities Act.