Corporate Bonds

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Corporate Bonds

Corporate bonds are debt securities that enterprises issue to raise capitals. Private companies and Public corporations issue corporate bonds ensuring fixed returns to the investors.  These debt instruments works as a loan that borrowers repay after a fixed term.

The company that issues bond termed as the “issuer”. On purchasing a corporate bond, you lend money to the issuing company and the company promises to return your money, the “principal” amount on a specific maturity date. 

On purchasing a corporate bond buyer does not own a stake or have an ownership interest in the company, only gets an acknowledgment of debt from the company. 

In simple terms purchasing corporate bond means, offering a loan to the company to perform its operations, under a legal contract the company repays the borrowed money.  Corporate bonds offer a higher rate of interest than government bonds.

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