Corporate Bonds
Debt issued by companies, typically with higher yields than government bonds.
What is it?
Corporate bonds are issued by companies to borrow money. They usually offer higher yields than government securities to compensate for higher credit risk.
Key Features
- Credit-rated instruments
- Varied tenures and coupon structures
- Listed and unlisted issues
Potential Benefits
- Potentially higher yields than G-Secs
- Fixed income visibility
- Diversification across issuers
Risks
- Credit and default risk
- Rating downgrades can affect prices
- Liquidity risk
Who May Consider It?
- Income-focused investors
- Investors comfortable assessing credit quality
Frequently asked questions
1. What does a AAA rating mean?
It indicates the highest degree of safety as assessed by a credit rating agency — it is not a guarantee.
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