Public Bonds vs Private Bonds: What’s the Difference?

The essentials in 30 seconds

A Unanimous Choice, Driven by Healthcare Professionals

People often talk about bonds as a single block : a technical financial instrument reserved for experts. Yet there are two major families, and understanding the difference between them completely changes the way you analyse an investment opportunity.

The distinction between public bonds and private bonds is not merely a matter of vocabulary. It determines who can access them, what level of information is available, what regulatory framework applies, and what type of risk the investor is exposed to. According to the AMF, more than 85% of bond issuance volumes in France remain inaccessible to retail investors, reserved for institutional markets. Public bonds represent the exception that democratises access to this market.

Projects such as Duralex and Galeon concretely illustrate this movement: companies that choose to address citizens directly rather than institutional funds alone. Galeon, present in 19 hospitals including 2 university hospitals with more than 3 million structured patient records, made this choice to finance its hospital deployment via Atlantis, its investment platform.

In this article, we break down the structural differences between the two types of bonds, what each implies for a retail investor, and how to choose based on your profile.

What Fundamentally Distinguishes a Public Bond from a Private Bond?

The difference does not lie in the status of the issuer : a private company can very well issue a public bond. It lies in who can subscribe and within what regulatory framework.

A public bond is open to all retail investors, with no wealth or professional qualification requirements. It is accompanied by a standardised prospectus, validated by the competent regulatory authority (the AMF in France, or its European equivalent), which details in accessible language the characteristics of the loan, the use of funds, and the associated risks.

A private bond is reserved for a restricted circle of professional or qualified investors: investment funds, banks, institutional players, or sometimes individuals whose wealth exceeds a regulatory threshold. The documents are more technical, negotiations are confidential, and conditions are set bilaterally.

"Public and private do not refer to the nature of the issuer, but to the audience the bond is addressed to. A private company can issue a public bond : this is precisely what Duralex and Galeon have done."

Who Issues Public Bonds, and Who Issues Private Bonds?

Issuers of public bonds

Historically, issuers of public bonds are sovereign and institutional players: the French State via its OATs (Obligations Assimilables du Trésor), regions, local authorities, and public bodies. These issuers use this mechanism to finance infrastructure, public services, and long-term investment policies.

However, the European ECSP regulation of 2021 expanded this category to private companies, provided they comply with a strict framework of transparency and investor protection. This is what enabled operations such as Duralex (industrial revival) and Galeon (hospital deployment).

Issuers of private bonds

Private bonds are exclusively issued by private companies, for projects requiring significant amounts or specific conditions that only professional investors can analyse and negotiate. Typical operations include acquisitions, debt restructuring, complex project financing, or large-scale early-stage capital raises.

What Level of Transparency Is Required in Each Case?

This is probably the most important difference for a retail investor, and it is often underestimated.

For a public bond

The issuer is subject to strict legal transparency obligations. It must publish a prospectus validated by the AMF (or equivalent), explaining in accessible language the purpose of the financing, the repayment structure, the interest rate, the identified risks, and any guarantees. This document is identical for all subscribers : there are no preferential conditions negotiated behind closed doors.

For a private bond

Documents are freer in their format, negotiations are confidential, and conditions may vary from one investor to another. Subscribers are expected to have the skills and resources necessary to analyse the situation themselves : this is the counterpart of their status as qualified investors.

"In a public bond, transparency is a legal obligation. In a private bond, it is a negotiation. These are not the same social contract between the issuer and the investor."

Is a Public Bond Necessarily Safer?

This is the most widespread misconception, and it deserves to be seriously nuanced.

The public nature of a bond does not guarantee its safety. What determines the risk is the financial solidity of the issuer, not the status of the bond. A German government bond is virtually risk-free. A public bond from a struggling company can be risky. The public/private distinction is not a risk scale : it is a scale of accessibility and transparency.

What the public nature does guarantee, however, is the level of information available. A retail investor subscribing to a public bond has access to a complete prospectus, validated by the regulatory authority, which details the risks in a standardised manner. They are not left alone facing a technical document they cannot decipher.

What Are the Specific Limitations to Know for Each Type?

Limitations of public bonds

Often moderate returns for sovereign issuers. OATs and government bonds offer low rates in exchange for near-zero risk. For higher returns, one must turn to corporate bonds, which carry greater risk.

Limited liquidity for corporate bonds. Unlike listed OATs, public bonds issued via crowdfunding platforms generally do not have an active secondary market. Capital is locked in until maturity.

Issuer analysis is essential. The regulatory framework protects on form : it does not guarantee substance. The solidity of the project remains for the investor to assess, regardless of the issuer's legal obligations.

Limitations of private bonds

Inaccessible to standard retail investors. The entry threshold and qualified investor status de facto exclude the vast majority of savers.

Relative opacity. Without the transparency obligations imposed on public issues, the investor depends heavily on the quality of information the issuer chooses to share.

Potentially higher risks. Complex private debt operations (LBO, mezzanine, high yield) can offer attractive returns, but with risk levels that require advanced financial expertise to be properly assessed.

"Understanding the difference between a public bond and a private bond means understanding who an investment offer is really addressed to, and therefore whether it is right for you."

FAQ: Public Bonds vs Private Bonds

Can you lose money with a public bond? Yes. If the issuer defaults, meaning it cannot honour its repayment commitments, the investor may lose all or part of their capital. The public nature of the bond is not a guarantee of repayment. Only government bonds from highly rated countries approach near-zero risk.

What is a qualified investor? Under the European MiFID II regulation, a qualified (or professional) investor is a person or entity whose financial assets exceed €500,000 or who has significant experience of financial markets. This status grants access to private bonds and certain complex financial products inaccessible to the general public.

Has the ECSP regulation changed the rules for corporate public bonds?Yes, significantly. Having come into force in November 2021, this European regulation precisely governs crowdfunding platforms that allow private companies to issue bonds to the general public. It imposes standardised information obligations, collection caps, and retail investor protection mechanisms, making this market far more readable and accessible than it previously was.

Why did Galeon choose the public bond format rather than private? The choice of a public bond reflects Galeon's philosophy: aligning the interests of all ecosystem stakeholders : patients, healthcare professionals, hospitals, investors. By opening its bond programme to the general public via Atlantis, Galeon allows anyone to directly finance the deployment of a concrete medical infrastructure, with the transparency of a regulated framework and the clarity of a fixed rate over a defined period.

Are there risk-free public bonds? Only bonds issued by States with maximum sovereign ratings (Germany, the United States, France to a lesser extent) approach near-zero risk. In return, their interest rates are very low. Any bond offering a rate significantly above that of government bonds carries higher risk, this is the risk premium, and it must be seriously analysed.

How do you verify that a public bond is properly regulated? Check that the issuance is accompanied by an information document registered with the AMF (in France) or the competent European regulatory authority. This document must be publicly accessible before any subscription. For crowdfunding platforms, verify that they hold the PSFP status (Crowdfunding Service Provider) issued under the ECSP regulation.

In Summary

The distinction between public bonds and private bonds comes down to two main axes: accessibility and transparency. A public bond is open to all retail investors, accompanied by a standardised prospectus validated by the regulatory authority, and finances an explicit and understandable project. A private bond is reserved for qualified investors, negotiated bilaterally, and may finance more complex operations with a variable level of information.

What "public" does not mean is "risk-free": the solidity of the issuer remains the determining factor. What "private" does not mean is "more profitable": the higher yield of certain private bonds reflects greater risk, not intrinsically superior quality.

The resurgence of corporate public bonds responds to a deep expectation among retail investors: understanding where their money goes, financing concrete projects, and participating directly in economic dynamics that were previously out of reach. Galeon embodies this logic by offering via Atlantis a bond programme open to all, directly linked to the deployment of a real medical infrastructure in European hospitals.

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