Issuer

An issuer is a legal entity that creates, registers, and sells securities to raise capital for its operations. Issuers can be corporations, investment trusts, mutual funds or ETFs (which aggregate investor funds and issue shares), or domestic and foreign governments. They are legally responsible for the obligations tied to the securities they issue and must meet regulatory reporting and disclosure requirements in the jurisdictions where they sell securities.

What issuers provide

Issuers most commonly make available:
* Equity securities — common and preferred stock
* Debt securities — bonds, notes, debentures, bills
* Derivatives and warrants
* Investment fund shares — mutual funds and exchange-traded funds (ETFs)

Writers of options are sometimes called issuers when they sell those options on a market.

How issuers operate (example)

If ABC Corporation sells common shares to the public to raise capital, ABC is the issuer. As such, it must file required disclosures with regulators (for example, the SEC in the United States) and comply with applicable legal and reporting obligations.

Non-issuer transactions

A non-issuer transaction is any disposition of a security that does not directly or indirectly benefit the issuer. In other words, the transaction occurs between parties without conferring funds or value to the issuing entity.

Issuers versus investors

The issuer creates and sells the security; the investor buys it. When an investor purchases a bond, they are effectively lending money to the issuer, who becomes a borrower. Before investing, buyers should assess the issuer’s creditworthiness and default risk.

Credit ratings of issuers

Credit rating agencies (e.g., Standard & Poor’s, Moody’s) assign ratings to issuers of debt to indicate default risk. Ratings use letter grades rather than numeric scores:
* High-grade examples: AAA — very low default risk
* Speculative/junk: BB and below — higher default risk
* Default: ratings such as DDD indicate default

Sovereign (country) issuers are rated similarly. For example, a country might be downgraded after missed repayments and later upgraded if it enacts reforms and stabilizes its finances.

Key takeaways

• An issuer is any entity that issues securities to raise capital and must meet regulatory and reporting obligations.
• Issuers include corporations, investment trusts, mutual funds/ETFs, and governments.
• Investors should evaluate the issuer’s credit rating and financial disclosures to judge default risk.