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Corporate Bonds

Corporate bonds refer to the bonds issued by corporate body as it is evident from its name. The term is used to refer longer term debt instruments with a maturity date occurring 12 months and more after the issued date.

At times, this term is used to imply all the bonds other than those issued by the governments in their own currencies. But strictly speaking, it is applied only to those bonds that are issued by the corporations. Corporate bonds are also enlisted on major exchanges and ECN's. Those bonds are described as listed bonds. The coupon or interest payment is also taxable.

But in spite of being listed on the exchanges , the majority of trading volume in corporate bonds in the developed markets occurs in decentralized , dealer-based and over the counter markets . When compared to government bonds, corporate bonds have a higher risk of default. But the risk depends upon the specific corporations and governments.

More Glossary Terms Explained here


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