Corporate bond rates are never static but are always fluctuating in the financial market. This is what makes investment in the corporate bonds a tricky affair. If you are also looking forward to increment your income by investing in the bonds then you will find this segment quite informative. Here I have highlighted certain facts that may help you to take the apt investment decision for yourself.
When it comes to investing in companies, you can do so either by purchasing shares or purchasing high yield bonds. Investing in shares of a company will make you a partial owner of the company. On the other hand, investing in bonds will make a lender to the concerned company. In the event of company becoming bankrupt, corporate bond holders are given preference over the share holders while distributing the company assets. Before gaining a deeper knowledge regarding the corporate bond rates you need to know about the two types of bonds.
Types of corporate bonds
Basically corporate bonds can be divided into two types of bonds – Investment-grade corporate bonds and the junk bond. Investment-grade corporate bonds generally have a ranking of B B B or higher. They are viewed as high yield bonds. These bonds are preferred by investors seeking higher investment returns that are otherwise not possible with the government or other similar bonds. The junk bond, on the other hand, has a ranking lower than B B B. As a matter of fact, the higher the ranking of the bonds the lower rate of yields will be offered by the issuer.
Before investing in the corporate bonds you need to carefully consider your strategies, personal expectations and intentions for investing.
Above all, read the annual financial reports of the company whose bonds you are contemplating to buy. This will give a fair picture regarding the corporate bond rates of the company. Happy investing!