Corporate bonds are debt securities issued by private and public corporations. Unlike the company’s equity stock, which gives stockholders ownership interest in the issuing company,the corporate bondholder has no such rights.
- Companies issue corporate bonds to raise money for a variety of purposes. This helps companies in addressing their liquidity crunch and at the same time maintain their ownership over company.
- When one buys a corporate bond, one lends money to the “issuer,” the company that issued the bond.
- In exchange, the company promises to return the money, also known as “principal,” on a specified maturity date along with interest.
- R.H. Patil committee had looked into the challenges of corporate bond market.
- Corporate Bonds are regulated by Securities and Exchange Board of India (SEBI).
Source: The Hindu Businessline