Saturday, December 25, 2010

Corporate Bonds

Corporate bonds are debt instruments issued by companies in order to raise debt financing. The bonds carry a set of rights (obligations by the company) to repay the capital at a certain point and specify an interest rate to be paid (which may be fixed or have resets/floats). Corporate bonds will usually pay a higher interest rate than government debt (the difference between the corporate bond market rate and the comparable maturity government bond is the credit spread). There are certain funds which invest specifically in corporate debt. Within corporate debt there are also what's known as high yield or junk bonds, which are bonds issued by companies with lower credit ratings.

Synonyms: Company debt, Private debt, Credit, Corporate debt, Corporate debt securities, Debt capital
 
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