Set out the segments of the bond market and the kinds of bond indexes

The fixed-income market is segmented in several ways, starting with issuer type: sovereign, non-sovereign government, quasi-government, supranational, corporate and securitised debt. It is also divided by credit quality into investment grade, rated BBB- or Baa3 and above, and high yield below it. It is divided by maturity into money markets and capital markets, and by currency and geography into developed and emerging markets. New issues are sold in the primary market and existing bonds trade in the largely dealer-based secondary market. Issuers include governments, companies and financial institutions; investors include central banks, pension funds and insurers matching long liabilities, banks, mutual funds and individuals. Indexes cover the broad aggregate market or a single segment, and are usually weighted by market value, which gives the largest weights to the most indebted issuers. Replicating a bond index fully is impractical because of its many illiquid issues and constant turnover, so managers typically use stratified sampling.