Finance - Corporate Bonds

Corporate Bonds

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Corporate bonds are similar to sovereign bonds. In the same way that sovereign states borrow money for expansion are redevelopment by the issue of bonds, so do large multinationals.

The return of capital on maturity is guaranteed, only to the extent of the strength of the issuing corporation. As these securities attract a slightly higher risk, they have to be competitive to attract new funds. Therefore the coupon is often 0.5% higher than a sovereign bond.