Corporate bonds are debt securities issued by companies to raise capital for various purposes such as expanding operations, refinancing debt, or funding new projects.

What are Corporate Bonds

Types of Corporate Bonds

These are the most common type of corporate bonds:

Fixed Rate Bond:

These bonds have a fixed interest rate that remains constant throughout the bond's life. Investors receive regular interest payments (coupons) at the fixed rate until maturity, when the principal amount is repaid.

Zero-Coupon Bonds

These bonds do not pay periodic interest. Instead, they are sold at a deep discount to their face value and mature at par. The difference between the purchase price and the face value represents the investor's return.

Tax-Free Bond

As the name suggests, the interest gained from this bond is completely tax-free and issued by Public Sector Undertakings to raise funds for different projects.

Convertible bonds

Convertible bonds give investors the option to convert the bond into a predetermined number of shares of the issuing company’s stock. This feature provides potential upside if the company’s stock performs well.

Secured Bonds

These bonds are backed by specific assets of the issuing company, such as real estate, equipment, or other collateral. In the event of default, bondholders have a claim on the secured assets.