Corporate bonds are loans issued by companies and funded by investors. In exchange for your capital, companies pay pre-agreed interest payments at regular intervals, and eventually repay the capital at a specified future date. The fixed nature of their payments makes corporate bonds particularly attractive for investors who want to supplement an existing income stream.
The corporate bond market is divided into two principal segments: investment-grade bonds, which are generally considered to be relatively financially secure; and high yield bonds, which offer higher interest payments than investment-grade bonds in order to compensate investors for taking a greater level of risk.
