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Trading and Investment Terms

Corporate Bond

Any company can issue corporate bonds, also called Non-Convertible Debentures.

Corporate bond funds are debt funds that lend at least 80% of their money to companies with the highest possible credit rating. 

 

This rating is given only to companies that are financially strong and have a high probability of paying lenders on time.

 

Corporate bond funds are increasingly becoming the popular debt instrument for businesses to raise required finances as associated costs are lower as compared to bank loans.

There are two types of corporate bond a mutual fund invests:

  1. Top-rated companies that have incredibly high CRISIL credit ratings. These are generally top public sector companies and Navratnas.
  2. Companies having a slightly lower credit rating of AA-

 

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