Corporate bond

A corporate bond is a bond issued by a company rather than a government, used to raise money for things like expansion, acquisitions, or refinancing existing debt. In exchange, the company promises to pay a coupon and to repay the face value at maturity.

Because a company can go bankrupt in a way a government generally cannot, corporate bonds carry credit risk that government bonds mostly do not, and they typically pay a higher coupon to compensate investors for taking on that risk. Credit rating agencies score corporate bonds by how likely the company is to make good on its payments, from investment grade down to speculative, often called high yield or junk.