Issuer Definition (2024)

What Is an Issuer?

An issuer is a legal entity that develops, registers and sells securities to finance its operations. Issuers may be corporations, investment trusts, or domestic or foreign governments. Issuers are legally responsible for the obligations of the issue and for reporting financial conditions, material developments and any other operational activities as required by the regulations of their jurisdictions.

Understanding Issuers

Issuersmost frequently make available the followingtypes of securities: common and preferred stocks, bonds, notes, debentures, bills and derivatives. Other issuers aggregate funds from a pool of investors to issue mutual fund shares or exchange traded funds (ETFs).

To illustrate the role of an issuer, imagine ABC Corporation sells common shares to the general public on the market to generate capital to finance its business operations. This means ABC Corporation is an issuer and is therefore required to file with regulators, such as the Securities and Exchange Commission (SEC), disclosing relevant financial information about the company. ABC must also meet any legal obligations or regulations in the jurisdiction where it issued the security. Writers of options are occasionally referred to as issuers of options because they also sell securities on a market.

A non-issuertransactionis one that is not directly or indirectly executed for the benefit of the issuer. Non-issuer transactions refer to any disposition of a security that does not confer a benefit to the issuer (company).

Key Takeaways

  • An issuer is a legal entity that develops, registers and sells securities to finance its operations.
  • Issuers may be corporations, investment trusts, or domestic or foreign governments.
  • Issuers make available securities such as equity shares, bonds, and warrants.

Issuers versus Investors

While the entity that creates and sells a bond or another type of security is referred to as an issuer, the individual who buys the security is an investor. In some cases, the investor is also referred to as a lender. Essentially, the investor is lending the issuer funds, which are repayable when the bond matures or the stock is sold. As a result, the issuer is also considered to be a borrower, and the investor should carefully examine the borrower's risk of default before buying the security or lending funds to the issuer.

Credit Ratings of Issuers

Ratings firms such as Standard and Poor's and Moody's create credit ratings for issuers of debt securities, just as credit bureaus create credit profiles and scores for individual consumers. Rather than being expressed as a number like consumer credit scores, issuer scores are pegged to letters. For example, if an entity has a AAA rating, it has a history of repaying its debts and boasts a very low rate of default. Conversely, it an entity has a DDD rating, it is in default. Issuers with ratings of BB or below have their bonds labeled as junk, indicating that they pose a high risk of default for investors.

Countries also receive credit ratings. For example, after Greece missed billions of dollars of loan repayments, its credit rating was downgraded to CCC+. However, after the country implemented reforms, cut costs and recapitalized its banks, Standard and Poor's increased its rating to B-, indicating that the company's bonds are a bit safer.

Issuer Definition (2024)

FAQs

What is the meaning of issuer? ›

Key Takeaways. An issuer is a legal entity that develops, registers and sells securities to finance its operations. Issuers may be corporations, investment trusts, or domestic or foreign governments. Issuers make available securities such as equity shares, bonds, and warrants.

What is an example of an issuer? ›

The issuer, also called the issuing bank or card issuer, represents the customer in a transaction. The issuing bank is the financial institution that supplies an individual with a payment card they use to initiate a transaction. An issuer can be a bank, credit union, or other financial institution.

Who is considered the issuer? ›

(8) The term “issuer” means any person who issues or proposes to issue any security; except that with respect to certificates of deposit for securities, voting-trust certificates, or collateral-trust certificates, or with respect to certificates of interest or shares in an unincorporated investment trust not having a ...

What does issuer name mean? ›

Name of Issuer means the legal entity of the company providing the insurance, bond or guarantee, etc.

What is the role of an issuer? ›

The common Issuer roles are in the areas of Loan Delivery and Pooling, Investor Reporting, Compliance and Oversight User, Processing Master Agreements, Financial Statements User, and Transfers.

What does refer to issuer mean? ›

01 – Refer to issuer. A 01 code means that there's a problem related to the issuing bank or account. It could indicate suspected fraud, insufficient funds, or expired card details. 03 – Invalid merchant. Rather than an issue with the account itself, this means there's a problem from the merchant's end.

What is the difference between issue and issuer? ›

Also, "emission" is often called a set of specific securities placed within one issue. Allocate the primary and additional issue of securities. Issuer is an entity who issues securities.

What are the different types of issuers? ›

There are five main classes of issuers, representing various sectors that issue corporate bonds: (1) public utilities; (2) transportation companies; (3) industrial corporations; (4) financial services companies; and (5) conglomerates. Such issuers may be U.S. companies or non-U.S. companies.

What is issuer risk? ›

Issuer risk is the risk that the issuer of a financial product cannot meet the obligations it has entered into. Investors bear the risk of i.e. changes of the creditworthiness and the risk of insolvency.

What does issuer mean synonyms? ›

What is another word for issuer?
publishereditor
commissionerproducer
publishing house

What is a US issuer? ›

Also known as US reporting company or US public company. A company subject to Section 13 or 15(d) of the US Securities Exchange Act of 1934 (Exchange Act), which requires the company to file periodic reports with the US Securities and Exchange Commission (SEC).

What is your issuer name? ›

The credit card issuing bank or issuer, as the term goes, refers to the banks that issue credit cards. The name of the bank which issued your card can usually be found displayed prominently on the front of your credit card.

What does no issuer mean? ›

Reasons you're receiving 'No Such Issuer' error code

Receiving error code 15 tells you the card number was entered incorrectly. To be more specific, it means the first number is incorrect. Each major credit card provider has its own number that every card they issue must start with.

Who is my card issuer? ›

It is the bank that has issued the credit or debit card to the customer. Issuing banks are members of the card scheme, such as Visa and Mastercard, but they can also operate as both issuer and card scheme—for example, American Express.

Are issuer and borrower the same? ›

Bonds are issued as forms of tradable debt. The bond issuer is the borrower, while the bondholder or purchaser is the lender. At the maturity of the bond, bond issuers repay the bondholder the principal value.

What does issuer mean on credit card? ›

A credit card issuer is a lender that offers credit cards. As part of the application and approval process, issuers determine credit limits, interest rates, rewards and more. Card issuers work with credit card networks like Mastercard® and Visa® that facilitate credit card transactions between issuers and merchants.

Why is my card declined by issuer? ›

This could be due to insufficient funds, frozen account status, invalid credit card number or expiration date, etc. Regrettably, the card issuing bank does not provide additional details regarding the reason for the decline. The customer will need to contact the card issuing bank for more information.

Is my bank my card issuer? ›

A card issuer enables cardholders to pay for goods and services. It is the bank that has issued the credit or debit card to the customer. Issuing banks are members of the card scheme, such as Visa and Mastercard, but they can also operate as both issuer and card scheme—for example, American Express.

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