Corporate Bond

Glossary

Banking

Corporate Bond

A corporate bond is an interest-bearing debt security that is issued by companies and sold predominantly to institutional investors through a syndicate of investment bank underwriters. Corporate bonds are issued mainly with fixed-rate coupons but they can come with floating-rate coupons. They can also be issued in zero coupon format, in which case they pay no interest and investors generate a return by selling at the accreted value or by redeeming at par at maturity. The company gets the capital it needs and in return the investor is paid a pre-established number of interest payments at either a fixed or variable interest rate.

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