Economy of a country

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What role does a corporate bonds market play in
economy of a country A bond is a debt
obligation, where the borrower is a government or
private entity and the lender is the investor.
Among the different types of bonds available for
investors, corporate bonds are a popular choice
among investors. Lets delve deeper into
corporate bonds
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What are Corporate Bonds and how do they boost
the countrys economy?
A corporate bond can be understood as a kind of
debt security issued by a private or public
company to generate capital. These are sold to
investors who get pre-decided interest payments
at a fixed or variable rate of interest. When the
bond completes its tenure and reaches maturity,
the interest payment stops and the amount
originally invested by the investor is returned
to him. The money a company raises through
corporate bonds can be used for various business
activities like the purchase of new equipment,
building a new plant, increasing production,
etc. As businesses expand their activities, it
increases production and the supply of goods in
the market. Moreover, it creates employment
avenues in the country, boosting the per capita
income of the nation.
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In most cases, the interest payment on a
corporate bond is semi-annual. A corporate bond
does not generate an ownership interest in the
company for the bondholder, unlike
equity. Additionally, bondholders get preference
over shareholders in case the issuing company
files bankruptcy.
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How to do valuation of Corporate Bonds?
Corporate bonds can help you diversify your
investment portfolio and reduce your
risk. Whenever there is a spike in the interest
rates, corporate bonds decrease in value and when
there is a fall in the interest rates, the value
of corporate bonds increases. The degree of
price volatility for a corporate bond increases
with its maturity.
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Types of Corporate Bonds

• Fixed-rate bonds Fixed-rate corporate bonds are
  issued for a fixed duration and offer a fixed
  interest rate to the bondholder.
• Floating-rate bonds Floating-rate bonds are
  usually issued by firms that are valued below
  the investment grade. These corporate bonds come
  with a variable interest rate.
• Zero-coupon bonds These bonds do not offer
  interest payment and are
• bought below the face value of the bond and sold
  at full value on maturity.
• Convertible bonds These bonds are endowed with
  the flexibility that the bond-issuing company
  can pay the investor with common stock in place
  of cash on the maturity of the bond.

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How to buy Corporate Bonds?

• You can buy corporate bonds in India through the
  following channels
• Through a broker An investor can buy corporate
  bonds through a broker. If you already have an
  account with a broker, you can ask them to place
  an order for you, or you can open an account
  with a new broker and buy corporate bonds through
  them. While investing in corporate bonds through
  a broker, an investor should know in detail
  about the bond he plans to buy.
• Through online platforms Buying corporate bonds
  through online platforms is
• the most reliable, quick, and stress-free option
  available. These platforms
• help investors make an informed decision by
  providing them with enough research and insight
  on the bonds. One of the most trusted online
  platforms to buy corporate bonds is BondsIndia.
• Through Mutual Funds You can also buy corporate
  bonds through mutual funds or exchange-traded
  funds (ETFs). This method does not

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require the investor to have deep knowledge about
corporate bonds. While new corporate bonds can
be bought by paying the face value of the bond
to the company and the brokers fee, bonds that
have already been issued can be bought in the
secondary bond market from investors who hold
them. The price for these bonds may be higher or
lower than the face value of the bond, depending
on the financial condition and market reputation
of the bond issuing firm.