Corporate bonds

RECENT NEWS
Mondo Visione  Apr 15  Comment 
The Research Department of the International Organization of Securities Commissions today published a Staff Working Paper entitled Corporate Bond Markets: A Global Perspective. The report presents findings from an in-depth study on the...
Finance Asia  Apr 15  Comment 
A flush of corporate Korean bond deals are likely in the coming days with telecoms company KT Corp setting the scene.
Financial Times  Mar 30  Comment 
Value of investment-grade corporate paper tops $20bn for first time in five years with issuers keen to take advantage of low yields
The Economic Times  Mar 21  Comment 
Sebi has directed stock exchanges and intermediaries to ensure that all over-the-counter trades in corporate bonds are reported within 15 minutes.
Mondo Visione  Mar 18  Comment 
Liquidnet, the global institutional trading network, announced today that it will enter the fixed income market with its acquisition of bond trading platform Vega-Chi. This partnership, subject to regulatory approval, will combine Liquidnet’s...
Wall Street Journal  Mar 5  Comment 
The first potential default in China's fast-growing corporate bond market offers a test of whether Beijing will allow corporate failures.




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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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