CHAPTER 4
CORPORATE BONDS
Most companies at some time need to borrow large sums of money to finance their operations, and it is vital that they try to do so to their best advantage, e.g. at the lowest cost, with an optimum mix in terms of maturity dates and with an acceptable pattern of cash outflows.
If a company finds that it needs extra debt capital to operate successfully, one of the ways it can source the capital is by issuing corporate bonds. These bonds are simply IOUs issued by the company and bought by investors who, in return for lending the company their money, receive interest payments (usually) and payment of the principal amount at a set time. In general, corporate bonds offer a higher rate of return than reputable government ...
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