Corporate bonds are symmetrical "to participate in company debt" refers to funding needs (the issuer) to issue debt certificates to fund providers, agreed repayment of its accrued coupon interest and principal payments, this debt bonds on behalf of the certificate is issuing company's liabilities during the period of the existence of corporate bonds, regardless of how profitable situation, time is required to pay a certain amount or rate of interest according to the conditions of issue, and according to the contract by the amount of principal repayment by. At present, all companies have to issue corporate bonds, but not publicly issued bonds issued by companies in its private equity limit.
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Corporate bonds classification
Have Guarantee Unsecured and secured, which can be divided into financial institutions secured guarantee (bank guarantee) and as_set_-backed (provided by the issuer of securities, real or personal property to the trustee bank, etc.). Coupon rate _set_ The coupon rate of the design is very flexible, generally at a fixed rate and floating rate issue. Fixed rate bonds during the period refers to the existence, the coupon rate of the bonds are fixed at a certain level, then the system of pre-_select_ed floating-rate interest coupon code to _set_ pointers and subtraction magnitude and corporate bonds during the period of existence on a regular basis in accordance with prevailing standards of the price index, re-_set_ the coupon rate for the period. We can design the coupon rate bonds with the following general formula, said: c = a * index + b where, c behalf coupon bonds, index reference indicator of market interest rates, a factor known as leverage (leverage) , while the coefficient b is the rate plus part can usually be used to reflect the credit risk of the issuing company. (1) a = 0 is a fixed bond coupon rate that is equal to b% fixed rate bonds. (2) a> 0 for the traditional floating bonds (floater), that is consistent with the direction of change in the bond's coupon rate and the index rate. Floating rate bond debt service will rise as market interest rates increase, but because the market prices are generally rising interest rates will make bonds fell, many market participants called floating rate bonds turn bearish bonds. (3) a <0 inverse floating rate bonds (inverse floaters), that is, the direction of change in the bond's coupon rate and the benchmark interest rate will be the opposite, in other words, the market interest rate decreases (increases), the bond interest but will also increase ( decrease), and floating rate bonds on the contrary, they called to see more bonds. (4) when the absolute value of a leverage factor is greater than 1, change the coupon rate will be greater than the change in the interest rate index. If a> 1, we call super-floating rate bonds (super floaters). This design makes the coupon rate influence changes in the benchmark interest rate increases, underscoring the risk reward characteristics of the bonds, making the original is regarded as low-risk, low-return bonds become high-risk financial instruments. For example, if the coupon rate is _set_ to 3ba - 50bp, when ba interest rates rise or fall by one percentage point, the coupon rate of the bonds will decrease by three percentage points. If you leverage a <-1, such as coupon rate-2.25ba + 17%, every change in the benchmark interest rate by one percentage point would make changes in bond interest income reverse effect 225bp due to gains in market interest rates such bonds move in the opposite , they are called ultra inverse floating rate bonds (super inverse floater). Corporate bonds coupon rate fixed by reference to the factors Market interest rates and capital position Other companies issued bonds reference rate Issuing company itself and ensure that the bank's credit rating or collateral The length of the period in issue Different ways of debt The issue of the size and market supply, the demand structure Remember bearer Style and type currently registered ordinary bearer bonds at issuance mostly in bearer form, but investors may also request this be changed in registered form.
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Investment risk corporate bonds
Interest rate risk: When market interest rates rise, bond prices fall Lost corruption risks: not report the loss of bearer bonds lost time Inflation risk: The higher the expected rate of inflation, the real return bond investors will be subject to erosion Reinvestment risk: When interest bonds, the coupon interest received may no longer be the original coupon rate risk investments Liquidity risk: When you need to hold bonds realized, perhaps because of market demand uncertainty and loss Risk of the issuer may be unable to continue to fulfill debt obligations: credit risk Prepayment risk: If a bond has a call option gives the issuer, the investor when interest rates fall, there is a risk to buy back rights issue of early repayment arising.
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Corporate bonds transactions
Primary market subscription: If the mining companies themselves raise the issue, subscribe directly to the issuing company by the investor, if the Department of underwriters underwriting commission, by the underwriters to negotiate specific person subscribed. Secondary market transactions: Outright trades: Department traded through brokers at the counter to buy the bargain way or sold. Securities sold under repurchase / resell transactions: brokerage on sell (buy), while corporate bonds, interest rates and customers after a certain period, to the agreed contract, the bonds in the principal amount plus accrued interest buy (sell ) transactions.
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Corporate bonds and corporate bonds
Corporate bonds: Corporate bonds is the bond engaged in the production, trade, transport and other economic activities of enterprises issued. Corporate bonds: In Western countries, since only the shares of the company to issue corporate bonds, so in Western countries, namely corporate bonds corporate bonds. In China, the corporate bond refers to bonds issued by enterprises of various ownership. Chinese corporate bonds where there are mainly corporate bonds, focusing on corporate bonds, with a coupon corporate bonds, certificates of deposit with this clear style corporate bonds, corporate bonds and corporate product quotas short-term financing bills.