What are Corporate Bonds?
Corporate bonds are debt securities or instruments issued by private or public corporations to raise capital for various business purposes such as expansion, research and development, and debt refinancing.
When a corporation issues a bond, it is essentially borrowing money from investors, typically for a fixed period of time, in exchange for payment of interest on an established predetermined basis until such time the bond reaches maturity, at which point the principal amount is repaid by the corporation to the investors.
Corporate bonds typically have a fixed interest rate, also known as the coupon rate, which is determined at the time of issuance based on a number of factors typically determined by the corporation, including prevailing market conditions.
The coupon rate remains constant throughout the life of the bond, and the interest payments are made at regular intervals. Corporate bonds are considered as income producing financial instruments, as they provide a fixed income stream to the investors with a defined maturity date. By such features, investing in corporate bonds is usually considered a mechanism to diversify an investor’s portfolio of investments, and generate a steady income. Corporate bonds is an investment option for investors looking for a regular source of income. Often, corporate bonds are asset backed whereby the assets of the corporation are put as security for benefit of investors in the event of default by the corporation.
Whare are the benefits of Corporate Bonds?
Corporate bonds offer several benefits to investors including:
Fixed Income: Corporate bonds provide investors with a fixed income stream in the form of regular interest payments, which can be attractive to those seeking a source of income. The interest payments are typically higher than those offered by government bonds, but also, they carry (generally) higher risk due to the fact, among other things, they are not guaranteed and/or backed by the government.
Diversification: Investing in corporate bonds can provide diversification benefits to investors by adding another asset class to their portfolio. Corporate bonds have historically exhibited lower volatility than stocks, and they tend to perform well during periods of economic uncertainty.
About Sentinel Capital
At Sentinel Capital, we offer a number of opportunities for investments in fixed income corporate bonds. The corporate bonds we represent are from issuers in multiple jurisdictions and in multiple industry sectors such as energy, renewables and property. We conduct stringent corporate, legal and financial due diligence of the corporate bond issuers and their bonds before onboarding these instruments for presentation to our investor clients; to verify, among other things, their performance and track record of paying coupons and redemptions. We encourage you to register on the Sentinel Capital investment platform at www.sencap.com upon which you may review the various corporate bonds we have to offer and choose those that are suitable for you.