{"id":3060,"date":"2018-10-27T09:00:53","date_gmt":"2018-10-27T03:30:53","guid":{"rendered":"http:\/\/capitalante.com\/?p=3060"},"modified":"2019-02-27T10:29:52","modified_gmt":"2019-02-27T04:59:52","slug":"5-points-to-consider-when-buying-corporate-bonds","status":"publish","type":"post","link":"https:\/\/capitalante.com\/5-points-to-consider-when-buying-corporate-bonds\/","title":{"rendered":"5 Points to Consider When Buying Corporate Bonds"},"content":{"rendered":"

Bonds or Securities or Debentures are like shares or stocks issued by different companies or Government authorities. These bonds or securities are much safer than stocks, though they yield lesser return. When these shares are issued by corporate houses or any business company they are called bonds and when these are issued by any Government authority they are called securities or government securities. Owing to the higher interest rate of 16%-17% in business loans government or the companies collect their capital to either run their business or expand the business by issuing securities or bonds or non-convertible debenture with a guarantee to repay the amount of the invested money when the security or bond is matured. When these bonds are issued by private companies they are known as corporate bonds. In this column<\/g> we will discuss the 5 Points to consider when buying Corporate Bonds.<\/span><\/p>\n

What is Government Securities<\/strong><\/span><\/h6>\n

Generally, government securities are considered as low risk as government<\/g> of India backs these securities with its monetary power and with a promise of interest payments usually half yearly. The same mechanism is followed by corporate companies. They also issue bonds or non-convertible debentures to collect money from the market. They usually offer higher<\/g> coupon rate i.e., the interest received on the principal amount invested than the government bonds.<\/span><\/p>\n

Usually, government<\/g> issues these bonds via RBI to meet the budget deficit and carry out the expenses to run the country. There are usually two types of govt. securities namely,<\/span><\/p>\n

Treasury notes (T-notes)<\/strong>\u00a0are intermediate-term bonds that mature within two, three, five or 10 years. They provide semi-annual interest payments at fixed<\/g> coupon or interest rates.<\/span><\/p>\n

Treasury bonds (T-Bonds)<\/strong>\u00a0are long-term bonds maturing between 10 and 30 years. T-Bonds provide semi-annual interest payments.<\/span><\/p>\n