Corporate bond

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A Corporate bond is a bond issued by a corporation, as the name suggests. The term is usually applied to longer term debt instruments, generally with a maturity date falling at least 12 months after their issue date (the term "commercial paper" being sometimes used for instruments with a shorter maturity).

Sometimes, the term "corporate bonds" is used to include all bonds except those issued by governments in their own currencies, although, strictly speaking, it only applies to those issued by corporations (those which are subsumed by neither category include the bonds of local authorities and supranational organizations).

Corporate bonds are often listed on major exchanges (such bonds being described as "listed" bonds) and ECNs like MarketAxess, and the coupon (i.e. interest payment) is usually taxable. However, despite being listed on exchanges, the vast majority of trading volume in corporate bonds in most developed markets takes place in decentralized, dealer-based, over-the-counter markets.

Compared to government bonds, they generally have a higher risk of default (although this risk depends, of course, upon the particular corporations, the current market conditions and governments being compared).