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Corporate Bonds

In: Business and Management

Submitted By theamazinap
Words 1263
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Corporate bonds have had a long thriving history in the fixed income market. The first corporate bond issued dates back to the construction of railroads after the conclusion of the Civil War. Increasing in popularity each year, the corporate bond issuance rate has been on a steady incline with daily trading in the billions. Corporate bonds are very complex but simple enough to where everyone can increase their wealth by investing in them. Essentially corporate bonds are debt that a company issues to the investor. Issued by either a private or public company, companies use these funds to build facilities, buy equipment and/ or expand their business. These businesses are typically public utilities, transportation companies, industrial corporations, and financial services companies. Investors may invest in corporate bonds when they see an opportunity to make a profit and/or to diversify their portfolio. A risk-averse investor would love corporate bonds because of their predictable returns, dependable income, flexibility and diversification. There are many different types of corporate bonds for the investor to invest in. They have the option to invest in Eurobonds, Rule 144A bonds, Yankee Bonds, and many other options. Although there are many different types of corporate bonds, Eurobonds are one of the most popular ways for a company to issue debt. A Eurobond is a U.S. denominated bond that is issued by an oversees company and held in a foreign institution outside both the U.S and issuers home nation. Many have named the decade of the 1950s the beginning of the Eurobond era. In this decade Europe started to become a major center of international finance, where they even began to surpass the United States. A Belgium petroleum company named Petrofina sold the very first Eurobond in 1957. These types of bonds are an important source of capital for multinational...

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