Corporate bonds

RECENT NEWS
The Hindu Business Line  Jul 22  Comment 
State-owned NHPC today said that its board has approved raising up to ₹ 4,500 crore through issue of corporate bonds on private placement basis.The board of directors of the company at its meeting hel...
Mondo Visione  Jul 21  Comment 
Pursuant to this Technical Note the term “private debt securities” will now be changed to “corporate bonds”, in line with the general  practice in the international market. The change will be applicable to all guidelines and notices...
The Economic Times  Jul 20  Comment 
It is constructing five projects with total installed capacity of 4290 MW, including 1000 MW (Pakal Dul HE Project) being executed through a join venture company.
Financial Times  Jul 12  Comment 
Post-Brexit pain confined to weaker sterling borrowers but complacency worries rise
Wall Street Journal  Jul 5  Comment 
With bond yields around the world falling further in the wake of Brexit, U.S. corporate bonds are the only game left in town.
The Hindu Business Line  Jun 28  Comment 
There’s a marginal increase in investment in downgraded ones too: Financial Stability Report
Wall Street Journal  Jun 13  Comment 
The European Central Bank said Monday it bought corporate bonds worth $392 million last Wednesday, making an aggressive start to a keenly anticipated stimulus program to lift inflation.
Wall Street Journal  Jun 8  Comment 
China’s vast corporate-bond market may be opening up to foreign investors as never before. But many are worried that companies issuing debt here remain too much of a closed book.




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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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