• A corporate bond is a debt issued by a company to raise capital.
  • An investor who buys a corporate bond is actually lending money to the company in exchange for a series of interest payments, but these bonds can also be actively traded on the secondary market.
  • Corporate bonds are generally considered somewhat riskier than US government bonds, so they usually carry higher interest rates to offset this additional risk.
  • The highest quality bonds (and the safest ones, with lower yields) are usually referred to as “AAAA” bonds, and the least creditworthy ones as “junk”.