What are corporate bonds?

Corporate bonds are debt obligations issued by corporations to fund capital improvements, expansions, debt refinancing, or acquisitions. Interest is subject to federal, state, and local taxes. Questions? The range of corporate bonds issued each year allows investors to tailor a bond portfolio around their specific needs.

How do corporate bonds work?

Corporate bonds are issued in blocks of $1,000 in face or par value. Almost all have a standard coupon payment structure. Typically a corporate issuer will enlist the help of an investment bank to underwrite and market the bond offering to investors. The investor receives regular interest payments from the issuer until the bond matures.

How much is a corporate bond worth?

The face (or par) value of a corporate bond is typically $1,000. That’s usually the minimum to buy a bond, though you can buy a diversified bond portfolio for much less using bond ETFs. If the corporation is unable to make its interest payments on a bond, the company is in default.