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Corporate Basics

What is a Corporate Bond?

A corporate bond is a debt security issued by a public or private company to raise capital.

They are generally issued in multiples of $1,000 or $5,000, and the issuing company must agree to pay a certain interest rate typically determined by their creditworthiness and earning history/potential.

Often times the corporation issuing the debt must use their physical assets as collateral, and it is often found that corporations are more likely to issue debt during an environment when interest rates are low, so they can borrow at attractive rates. Corporate debt that matures in less than one year is called ‘commercial paper.’

What Happens When a Company Goes Bankrupt?
What Types of Bonds Are There?
What is a Convertible Bond?

Keywords: interest rates, debt, corporate bonds,