Investment Grade Corporate Bonds

Sometimes A corporation needs to expand, operations or is looking at a possible new business venture, but need capital to accomplish this action. In some cases the company turns to the shareholders for help. One way is to sell bonds on the corporate bond market.

A company decides how much money is needed , and they issue a bond in that amount. Investors who buy corporate bonds are essentially lending money to the company. In turn the investors will receive interest payments on their loan per the predetermined bond agreement..

Corporate bonds are different then stocks, or mutual funds. With Stocks , and Mutual funds, the purchaser has an interest an part ownership in the company which they bought shares< giving then voting rights, and other perks. Bonds are basically IOU's and have the purchasers have no ownership in the company. Instead they are paid interest on their loan, and all money is paid back on a preset maturity date. At this point all ties with the both parties are done.

Investment grade bonds are considered one of the safest of all stocks and

bonds to purchase, and the most likely to succeed. This makes buying investment grade bonds attractive. It can generate a continuous flow of income for so0me bond investors, who invest wisely. Overall, bonds are safer then stocks because of the company was go bankrupt, the bond holders are paid before the stock shareholders.

Bonds are rated on performance and investors can use this as a tool if they are thinking about bond investing. The higher the rating the better the performance of the company. Any bond that gets a "AAA" or "AA rating is considered the best for credit, and the safest. A rating of "AA" or "BBB", are investment grade bonds, and a medium risk. A rating of "BB", "B", or "CCC" are considered low credit quality, or simply a junk bond, and very risky. Junk bonds paid substantially more the investment grade bonds, but have a much greater risk in default, which means losing your investment. These rating tools are very beneficial for bond traders, to ensure they have good investments, and aid in an investment plan