Issuer

Reviewed by Apoorva | Updated on Aug 26, 2020

Introduction

An issuer is said to be a legal entity that develops, registers, and sells securities to raise funds for its operations. Issuers can be corporations, investment trusts, or domestic/foreign governments.

Understanding Issuer

Issuers mostly offer securities in the form of common and preferred stocks, bonds, debentures, notes, bills, and derivatives. Other issuers may collect funds from a pool of investors to issue mutual fund shares or exchange-traded funds (ETFs).

Factors to consider before you invest

Rating agencies, such as Standard and Poor's and Moody's, create credit ratings for issuers of debt securities, similar to credit bureaus creating credit profiles and scores for individual consumers. However, the score for issuers is denoted by letters and not numbers. For example, if a firm has a rating of AAA, it means that the firm has a history of repaying its debts on-time and boasts a very low rate of default.