Corporate bonds

RECENT NEWS
Reuters  Sep 29  Comment 
The Federal Reserve might be able to help the U.S. economy in a future downturn if it could buy stocks and corporate bonds, Fed Chair Janet Yellen said on Thursday.
The Hindu Business Line  Sep 27  Comment 
The Finance Ministry hopes that foreign portfolio investors’ (FPIs) exposure to the domestic bond markets will rise from the present 65 per cent of their permissible ceiling of $51 billion.“Against th...
The Hindu Business Line  Sep 26  Comment 
Finance Minister Arun Jaitley will tomorrow address a session on ways to develop the corporate bond market and possibilities of sharing the best practices followed by BRICS countries.Jaitley will del...
The Times of India  Sep 23  Comment 
With an aim to deepen corporate bonds market by attracting more overseas funds, markets regulator Sebi today decided to allow well-regulated Foreign Portfolio Investors (FPIs) to trade directly trade in these securities without any broker.
Wall Street Journal  Sep 12  Comment 
Japan’s corporate bond market is taking off just in time for the Bank of Japan to play an even bigger role in it.
SeekingAlpha  Sep 7  Comment 




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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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