Bodies that can access the capital market, public companies, government. - SS3 Commerce Lesson Note

Public Companies:

• Public companies are businesses that have sold shares of their ownership to the public through an initial public offering (IPO). When a company goes public, it means its shares are traded on a stock exchange, and anyone can buy or sell those shares. Here are some key points about public companies:
• Ownership: Public companies have multiple owners who hold shares of the company's stock. These shareholders can include individual investors, institutional investors (like mutual funds or pension funds), and even other companies.
• Disclosure: Public companies are required to disclose financial and operational information to the public. They must provide regular reports, such as quarterly and annual financial statements, to ensure transparency and keep shareholders informed.
• Capital raising: Public companies can raise capital by selling additional shares to investors or issuing corporate bonds. This capital can be used for various purposes, including funding expansion, research and development, or paying off debt.
• Regulations: Public companies are subject to various regulations and oversight by government authorities, such as the Securities and Exchange Commission (SEC) in the United States. These regulations aim to protect investors and maintain the integrity of the capital markets.

Government:

Governments, at different levels (national, state, or local), can also access the capital market to raise funds for public projects and infrastructure development. 

• Bonds: Governments issue bonds to borrow money from investors. Bonds are essentially loans that investors provide to the government, and in return, the government promises to pay periodic interest and repay the principal amount at maturity.
• Purpose: Governments typically issue bonds to finance public projects like building highways, bridges, schools, or other infrastructure. They may also issue bonds to cover budget deficits or refinance existing debt.
• Credit rating: The creditworthiness of a government is an important factor in determining the interest rate it must offer on its bonds. Credit rating agencies evaluate the financial health and ability of governments to repay their debt obligations, which affects the cost of borrowing.
• Sovereign bonds: Bonds issued by national governments are often referred to as sovereign bonds. These bonds are considered relatively safe investments because governments have the power to tax their citizens to repay their debts.