Definition
Corporate bonds are debt instruments issued by companies to finance operations, expansions, or acquisitions. They typically offer higher yields than government bonds to compensate for credit risk. Corporate bonds are rated by agencies (S&P, Moody's) and range from investment-grade to high-yield (junk).
Example
Apple issues a 10-year corporate bond at 4.5% coupon. Investors receive higher yield than Treasuries in exchange for Apple's credit risk.
FAQ
What is Corporate Bond?
A debt security issued by a company to raise capital.
Why is Corporate Bond important?
Corporate Bond helps investors evaluate fixed income and make more informed decisions.
Related Terms
Credit Rating
An assessment of a borrower's creditworthiness by rating agencies.
Investment Grade
Bonds rated BBB- or higher, indicating relatively low default risk.
High-Yield Bond (Junk Bond)
A bond rated below investment grade that offers higher yields due to higher risk.
Credit Spread (Bonds)
The yield difference between a corporate bond and a similar-maturity Treasury.