Corporate bonds

RECENT NEWS
The Economic Times  Dec 4  Comment 
SEBI considers allowing companies to re-issue corporate bonds in a bid to avoid fragmentation of debt markets with multiple issuances.
Financial Times  Nov 24  Comment 
‘Lower-for-longer’ funding costs driving refinancing, says Fitch
Wall Street Journal  Nov 23  Comment 
The performance of corporate bonds, and a divergence between markets in the U.S. and Europe, should give stock investors pause.
OilVoice  Nov 13  Comment 
Green Dragon Gas Ltd. LSEGDG one of the largest independent companies involved in the production and sale of CBM gas in China is pleased to announce that the Company has issued its first public c




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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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