Corporate bonds

RECENT NEWS
The Hindu Business Line  6 hrs ago  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.
Reuters  Jul 28  Comment 
Russian bank and company bonds denominated in dollars and euros have slumped in value in the past few days in anticipation of tough European Union sanctions.
The Straits Times  Jul 24  Comment 
July 25, 2014 1:01 AM RETAIL investors may soon find it easier to buy products such as corporate bonds, now largely the preserve of bigger investors.




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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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