Corporate Bonds

Simply put, a bond that is issued by a corporation is known as a corporate bond.  These types of bonds can be issued by both private and public corporations, and by financial, service, or industrial companies.  Making the business grow may be one of the many reasons that a corporate bond is issued by a company.  When purchasing a corporate bond, money is lent to the issuer, which is the company that issued the bond.  The company then returns the money, which is known as the principal.

After a corporate bond has been issued, the maturity date usually falls at least a year after this date.  In some cases, a corporate bond can also be other bonds as well, even bonds that are not issued by corporations.  Basically, all bonds - aside from government issued bonds - are sometimes referred to as corporate bonds.

Depending on the particular corporation that issued the corporate bond, the risk of default amongst corporate bonds is usually higher, especially when compared to government bonds.  Other factors that determine how high the risk is include the current conditions of the market, the company rating and the governments that are being compared.

For those that may wish to possess a corporate bond with a quicker maturity date, there are some corporate bonds that have an embedded call option that will allow just this.

Additionally, corporate bonds are usually listed on major exchanges and the interest payment on corporate bonds is often taxable.  When it comes to total face value of bonds outstanding, the corporate bond market is actually larger than each of the markets for

U.S. treasury securities, municipal bonds, and government agencies securities.  There are also many choices and options to choose from for a corporate bond investor when it comes to coupon rates, maturity dates, structures, and industry exposure and credit quality.  Invest in a corporate bond today!