Bonds, Corporate

Bonds, Corporate

Corporate bonds are debt securities issued by private and public corporations. Companies issue corporate bonds to raise money for a variety of purposes, such as building a new plant, purchasing equipment, or growing the business.

When you buy a corporate bond, you lend money to the "issuer," the company that issued the bond. In exchange, the company promises to return your money, also known as "principal," on a specified maturity date. Until that date, the corporation usually pays you a stated rate of interest, generally semiannually. While a corporate bond gives you an IOU from the company, you do not have an ownership interest in the issuing corporation—unlike when you purchase the company's stock.

The Securities Industry and Financial Markets Association has a website, investinginbonds.com, that has information on corporate bonds that that explains corporate bonds and how you can make money by lending your money to corporations.

The Financial Industry Regulatory Authority (FINRA) has a database on corporate bonds that can help you get market information about corporate bonds.

 

We have provided this information as a service to investors.  It is neither a legal interpretation nor a statement of SEC policy.  If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.