corporate bond

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corporate bond

A financial advisor explains a corporate bond certificate to a client.

Definition
  1. Noun:
    • A debt security issued by a corporation: A corporate bond is a type of loan that an investor makes to a company. In exchange, the company promises to pay back the principal amount on a specified maturity date and to make regular interest payments until that date.
    • A fixed-income investment without ownership rights: Unlike stocks, a corporate bond does not represent ownership in the company and does not pay dividends. However, the company's obligation to pay bondholders takes priority over payments to stockholders if the company faces financial difficulties.
Usage Examples
  • Noun:
    • The company raised capital by issuing a new corporate bond.
    • Investors seeking steady income often include corporate bonds in their portfolios.
    • The yield on that corporate bond is very attractive.
Advanced Usage

  • "Investment-grade corporate bond": A bond issued by a company with a high credit rating, indicating a lower risk of default.

    • Pension funds are required to hold a large percentage of investment-grade corporate bonds.

  • "High-yield corporate bond" (or "junk bond"): A bond issued by a company with a lower credit rating, offering a higher interest rate to compensate for the greater risk.

    • The fund specializes in trading high-yield corporate bonds.
Variants and Related Words

  • Bondholder (n): An investor who owns bonds.

    • Bondholders will receive their interest payment next month.

  • Debenture (n): A type of corporate bond that is not secured by physical assets or collateral.

    • The company's debentures are traded on the major exchanges.
Synonyms
  • Company bond: A less common synonym with the same meaning.
  • Debt security: A broader category that includes corporate bonds, government bonds, and other instruments.
Related Phrases

  • "To issue a bond": The act of a corporation offering and selling bonds to investors.

    • The corporation plans to issue a bond to finance its new factory.

  • "Bond maturity": The date on which the bond's principal amount is scheduled to be repaid to the investor.

    • The corporate bond has a maturity date in ten years.

  • "Default on a bond": The failure of a bond issuer to make a promised interest or principal payment.

    • The market feared the company might default on its corporate bonds.
corporate bond

A financial advisor explains a corporate bond certificate to a client.

Noun
  1. a bond issued by a corporation; carries no claim to ownership and pays no dividends but payments to bondholders have priority over payments to stockholders
    • a corporate bond is a safer investment than common stock in the same company