How do corporate bonds work in India?

Corporate bonds are debt instruments that are issued by companies in order to raise capital. They are typically issued in denominations of Rs. 10 lakh or more, and have a tenure of at least one year. Interest on corporate bonds is paid out periodically, usually every six months.

When you purchase a corporate bond, you are effectively lending money to the company that issued the bond. The company will use this money for its business operations, and will repay the principal amount of the loan plus interest at maturity. In most cases, corporate bonds are traded on stock exchanges, and can be bought and sold before maturity.

One of the main advantages of investing in corporate bonds is that they offer relatively higher interest rates than other fixed-income instruments such as bank deposits or government bonds. This is because corporate bonds are considered to be higher risk investments than government bonds, and hence offer higher returns to compensate for this risk.

Another advantage of investing in corporate bonds is that they provide greater flexibility with respect to tenure and interest payments. For instance, some corporate bonds may offer monthly interest payments, which can be useful for investors who require regular income from their investments. Additionally, many corporate bonds have call options, which allow the issuer to redeem the bond before maturity. This gives investors the opportunity to exit their investment early if they so choose.

A corporate bond is a debt security issued by a corporation to raise capital from investors. The funds raised through the sale of corporate bonds are typically used to finance a variety of corporate projects, such as operational activities, expansion, or acquisitions. Corporate bonds are typically issued in denominations of $1,000 and have a maturity date ranging from one to 30 years. Interest on corporate bonds is paid at fixed intervals, usually semiannually. Unlike most other types of bonds, corporate bonds are not backed by collateral. This means that if the issuer defaults on the bond, investors may not be able to recover their investment. Investors in corporate bonds typically include institutional investors such as insurance companies and pension funds, as well as individual investors. Corporate bonds are traded on the secondary market, where they can be bought and sold prior to maturity. The price of a corporate bond will fluctuate based on a number of factors, including interest rates, creditworthiness of the issuer, and overall market conditions.

Investing in corporate bonds can be a good way to earn higher returns than what is possible with other fixed-income instruments.