Corporate bonds

RECENT NEWS
SeekingAlpha  Sep 24  Comment 
By Anthony Fernandez: Over the past few years, a narrative has been passed around financial circles (and to the general public) that corporations have been loading up on cash and securing their positions so as to avoid repeating a 2008 style...
Financial Times  Sep 23  Comment 
Secondary market in exchange of US corporate bonds reacts to greater regulatory and investor scrutiny and adopts more transparent trading practices
New York Times  Sep 22  Comment 
In a paper released Monday afternoon, the giant asset manager said that the market for trading corporate bonds was “broken” in a way that hurts ordinary investors and companies borrowing through the market.
The Hindu Business Line  Sep 21  Comment 
It actively invests outside the triple-A rated bonds to maximise yields
The Economic Times  Sep 3  Comment 
Prime Minister Narendra Modi’s acche din may soon reflect in the corporate bond market with higher demand, increasing liquidity and falling yields.
newratings.com  Aug 27  Comment 
Optima Worldwide Group Ltd makes the following announcement: OWG are pleased to announce that it has raised a total of £6,070,000 as at 30th June 2014 from its First Corporate Bond since its issue in 2013. The Company intends to close this Bond...
SeekingAlpha  Aug 20  Comment 
By Matt Tucker, CFA: In my last Blog post, I discussed how the search for income in a low interest rate environment sparked flows into high yield bonds, and how this segment has seen a sell-off in recent months. Looking at the corporate bond...
Forbes  Aug 19  Comment 
Recent investigation into a former director of China’s top economic planner, the National Development and Reform Commission, has led to a shakeup in a division overseeing corporate bond issuance, financial news magazine Caixin reported.




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A corporate bond is a bond issued by a corporation. It is a bond that a corporation issues to raise money in order to expand its business. The term is usually applied to longer-term debt instruments, generally with a maturity date falling at least a year after their issue date. (The term commercial paper is sometimes used for instruments with a shorter maturity.) Sometimes, the term "corporate bonds" is used to include all bonds except those issued by governments in their own currencies. Strictly speaking, however, it only applies to those issued by corporations. The bonds of local authorities and supranational organizations do not fit in either category.

Corporate bonds are often listed on major exchanges (bonds there are called "listed" bonds) and ECNs like Bonds.com and MarketAxess, and the coupon (i.e. interest payment) is usually taxable. Sometimes this coupon can be zero with a high redemption value. However, despite being listed on exchanges, the vast majority of trading volume in corporate bonds in most developed markets takes place in decentralized, dealer-based, over-the-counter markets. Some corporate bonds have an embedded call option that allows the issuer to redeem the debt before its maturity date. Other bonds, known as convertible bonds, allow investors to convert the bond into equity.

Corporate Credit spreads may alternatively be earned in exchange for default risk through the mechanism of Credit Default Swaps which give an unfunded synthetic exposure to similar risks on the same 'Reference Entities'. However, owing to quite volatile CDS 'basis' the spreads on CDS and the credit spreads on corporate bonds can be significantly different.

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