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Corporate Bonds

Corporate bonds (also called “corporates”) are debt obligations, or IOUs, issued by privately and publicly owned corporations. When you buy a corporate bond, you essentially lend money to the entity that issued it. In return for the loan of your funds, the issuer agrees to pay you interest and to return the original loan amount – the face value or principal – when the bond matures or is called (the “maturity date” or “call date”).  

Corporate bonds range from triple “A” to below investment grade. Investment grade are bonds rated BBB-/Baa3 or higher. Bonds with lower ratings are considered high yield, or speculative.  Credit risk, liquidity risk, and interest rate risk are main drivers of corporate bond prices.  

For additional information on corporate bond education and investing in specific bonds: https://www.finra.org/investors/learn-to-invest/types-investments/bonds/types-of-bonds/corporate-bonds and http://finra-markets.morningstar.com/BondCenter/Default.jsp