Successful investing starts with understanding the building blocks of a portfolio. In episode 82 of Bridge talks Business, Remy Wisenberg breaks down the basics of bonds: what they are, how they differ from shares, and why companies and governments issue them. From real-world corporate bond examples to how Milford actively manages bond funds, this conversation offers a clear and practical introduction to fixed income investing and the role bonds can play in generating steady returns for investors.

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Bridge talks Business: 30 June 2026
Episode Transcript

Ryan Bridge

Kia ora and welcome to episode 82 of Bridge talks Business with Milford. Big tech is tapping hard into debt markets to fund its massive AI revolution and they’re using bonds. Almost half of all investment-grade bonds being issued are from AI related firms. So what exactly is a bond? Remy Wisenberg from Milford is here to explain.

First, your top five business bits.

    1. Andy Burnham, potential UK PM, gave his first speech. He outlined a 10-year growth plan focused on UK domestic industry. He also reaffirmed crucially a commitment to existing UK fiscal rules, which Gilts and sterling liked.
    1. Global PMIs continued showing US outperformance, with both services and manufacturing moving up again. Europe stabilised, modestly driven by services. UK surveys, further weakness for them.
    1. Australian data was mixed last week. Inflation was broadly in line, but continued to suggest lingering inflation pressures. Employment data showed that the labour market is softening, but from a very tight level.
    1. We get to labour market data in the US, which is an important catalyst. Markets are pricing a modestly more hawkish Fed rate path, given the strength of the data. So the market is looking for a strong job number to reaffirm their take.
    1. We’ll have European Central Bank Forum this week, where we will hear from the major chairs of the central banks, lots of noise, but little in the way of substance or Ford guidance as actually expected.

So how are all these big tech companies funding all of this AI infrastructure? Well, a lot of it, as we’ve mentioned earlier, comes down to bonds. Here to explain to us today what exactly is a bond, what’s the difference between an investment bond and a junk bond, we are joined by Remy Weisenberg, who’s a credit analyst at Milford. Just a reminder, this segment is informational only and should not be considered financial advice. Remy, welcome back to the podcast.

Remy Wisenberg
Great to be here, Ryan.

Ryan Bridge
Lovely to see you. So we’re talking about bonds today. Have I got this right? Let me tell you what I think it is, and you tell me if I’m wrong. I’m like the bank. I’m basically lending the money. They want money. I’m lending the money. Is that it?

Remy Wisenberg
Yeah, yeah, that’s right. So basically like a bond is – it’s a debt instrument and it’s issued by a government or a corporate. And that’s exactly right. As an investor, you’re essentially lending that government or that company money, and that’s in return for typically a fixed interest payment. So you’ll receive an interest payment for lending that company or government money every year up until that time when they repay you that initial amount that you’ve lent them.

Ryan Bridge
So who am I more likely to make the most money off, a government or a corporate? Usually a corporate, right?

Remy Wisenberg
Yeah, that’s right. So if we think about lending to a government, there’s a very high likelihood of repayment, you know, so lower risk. And often the rate that you’d receive on a government bond sets the benchmark interest rate. When you’re lending money to a corporate, there’s a bit more risk involved, you know. Their ability to repay depends on a whole range of factors, what industry they’re in, what level of investment they are making, what their earnings profile looks like. And so to compensate investors for that risk, companies pay what we call a credit spread or a margin, which is that additional amount on top of an equivalent tenor government bond. So essentially, if you are an investor in a corporate bond, that total fixed interest rate that you’d be receiving is typically more than what you’d receive on a government bond, and that’s to compensate for the difference in risk.

Ryan Bridge
Now, this has been happening for ages, but it happens all the time. But especially at the moment with AI. We see all these headlines, companies are investing money, throwing money into AI, the AI revolution. A lot of that is actually off the back of bonds, right?

Remy Wisenberg
Yeah, that’s right. So that’s a theme that we’ve been seeing a lot throughout this year. We have been seeing some of these AI companies, they need to raise money, and they have been issuing bonds to help fund some of this AI capex. That is a theme that we are continuing to see.

Ryan Bridge
And Meta is a particular example of that, right?

Remy Wisenberg
Yeah, that’s right. So maybe if we take Meta as an example, earlier this year they raised $25 billion through a bond deal, and they broke that up into many different bonds. And the reason that they did that is because they don’t want to have a whole $25 billion that’s due in, you know, five years’ time. So they broke that up into five, seven, 10, 20, 30, 40 years to make that a bit more manageable. And how it worked is maybe if we say the five-year bond, for example, they shared $3 billion there. So many different investors, they all pulled in, they lent that $3 billion to Meta. And Meta will have to pay a fixed interest rate to those investors. So it was 4.55% in the case of the three-year. And that’s a spread of 0.53% above a five-year government bond. So that 0.53% is that credit spread that I spoke about before to compensate investors for that risk of investing in Meta versus the government.

Ryan Bridge
Because Meta probably more likely to not pay you back compared to the government.

Remy Wisenberg
I would hope that they’d still pay you back, but it does compensate investors for taking that additional risk versus buying a government bond.

Ryan Bridge
Right. And do you have to hold it for the whole five years or 10 years or 40 years or whatever it is? Or can you sell bonds? How does that work?

Remy Wisenberg
You can buy and sell bonds. So if you hold a bond all the way through until its repaid and you’ve got that fixed interest rate, so let’s say that Meta five-year bond, I’m getting 4.55%. If I hold that right through to that five years, I know I’m going to get my 4.55% right through and then I’ll get my money back. But I might want to sell that bond. I might need to raise cash or my bond’s value might go up or down. And so I might want to sell it in the secondary market. So yes, you can buy and sell bonds before they’re repaid.

Ryan Bridge
Okay. And in terms of the security, what happens if the company can’t pay you back? Does that happen often? Because they’re often spoken about as the sort of safe haven, aren’t they, bonds? They sort of have that vibe about them.

Remy Wisenberg
Yeah. I mean, in most cases, investors typically do get their money back, but there are different grades of bonds. So there are what we call investment-grade bonds. These are your bonds that have a rating from the credit rating agencies of triple B, minus and above. And then you’ve got high-yield bonds or sometimes referred to as junk bonds. And those are more risky and they have different investor protections built into them to help mitigate some of those risks. But generally speaking, when we talk about investment-grade bonds, in most cases, investors would typically get their money back.


Ryan Bridge
And just to clarify, completely different from shares, right? Shares, you’re buying ownership of a company. Here you’re owning their debt, essentially.

Remy Wisenberg
That’s right. So shares are an ownership in a company. And bonds, you have lent a company money and you’re owed money by that company. So you don’t have any share in the ownership.

Ryan Bridge
What about, and this is part of what you do for a living, but finding bond opportunities and new bond opportunities, where do you look?

Remy Wisenberg
That’s a great question. So there’s actually two ways. There’s the primary market. So that is when a bond issuer comes to the market for the very first time to raise money. So earlier this year when Meta came to the market, that was a primary issuance. So it’s issuing those bonds into the market, then new bonds. So that’s one way. Then we have the secondary market. So that’s what we spoke about before, when investors are buying and selling bonds after they’ve already been issued, but before they’ve been repaid.

Ryan Bridge
And what do you find on there? I mean, how often are you getting new issuances?

Remy Wisenberg
There are issuances every day. So every day there might be issuances from companies. There might be new issuances from governments. So it’s a very fluid and dynamic market, and there are issuances in different markets around the world. So bond markets are in multiple currencies. You’ve got US dollars, you’ve got Euro, Australian dollars, even New Zealand dollars. So there’s always something going on somewhere in the world.

Ryan Bridge
And in terms of Milford’s overall portfolio, how much appetite is there for bonds?

Remy Wisenberg
So Milford actually has two fully dedicated bond funds. So we have a Trans-Tasman Bond Fund, which invests in bonds in Australia and New Zealand. And we also have a Global Corporate Bond Fund, so that invests in bonds anywhere in the world. So US dollar, Euro, Aussie, New Zealand. And those bond funds only invest in bonds. And then we also have what we call Diversified Funds. So we have a Diversified Income Fund and the Active Growth Fund. And they hold a mixture of both equities, so shares, and also bonds.

Ryan Bridge
Right. It’s one of those words I think that probably confuses people. You know, when we talk about it in news, you talk about bonds, everyone’s like, “Mmm,” you know, and there’s the yield and then there’s the spread and, you know, it all gets a bit confusing. But essentially, it’s just debt.

Remy Wisenberg
That’s right, exactly. And the value of bonds can go up and down. They’re just not tied in the same way as shares to company earnings. So the value of a bond before it’s repaid can fluctuate depending on movements and interest rates and credit spreads. Now, if I take a step back and explain this, because this is where people get quite confused with how bonds work. So let’s think about that Meta bond. I’m getting my 4.55%. That’s fixed right up until I get my money repaid. Now, let’s say Meta becomes a more risky company and that credit spread that I spoke about before, maybe investors think, “Actually, I need, you know, 0.6% above a government bond to hold Meta risk”.

Ryan Bridge
But you’ve already signed up, you’ve locked in.

Remy Wisenberg
Correct. So I’m only getting 0.53% credit spread on my Meta bond. So the value of my bond would go down and the opposite is true if those credit spreads narrowed. Then the other factor is the underlying interest rate move. So your benchmark interest rate, your government bond, if Meta’s credit spread stayed the same but the government bond or government interest rates went up, if Meta was to issue a bond today, even at that same spread level, their overall interest rate above the government bond – so we take the total interest rate – would be higher, then my bond value goes down because I’m still getting my 4.55%.

Ryan Bridge
Right. So there is a risk. You get your 4.55% whatever, but the company is valued less at the end. Therefore, when you get your money back, you get less?

Remy Wisenberg g
No. No. So it doesn’t work like that. So your bond can fluctuate in value throughout its life, but ultimately the company is contractually obligated to pay you the amount that you invested.

Ryan Bridge
Right. Because you’re buying debt, not ownership.

Remy Wisenberg
Correct. So if I buy and sell my bond in the secondary market, I may gain or lose money. But ultimately, if I hold it all the way through to maturity when Meta repays me that amount, they have to repay me the amount I invested.

Ryan Bridge
Amazing. A revelation. I seriously did not know that last bit. Thank you. I’m James Bond now. Remy, thank you very much. Lovely to see you again.

Remy Wisenberg
Great. Great to be here. Thanks, Ryan.

Ryan Bridge
That was Remy Wisenberg, credit analyst at Milford, talking to us about bonds, the different types of bonds, how long they take to mature, how you can sell them on a secondary market, so much good information. Just a reminder, you can like, follow and subscribe this podcast wherever you like to share it with your friends. You never know, you might learn something. Until next week, don’t forget to invest in yourselves.

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