Corporate Bonds
If a government, institution, or company wish to raise money, there are a number of choices open to them. Governments may raise revenue through taxation, or amending their spending plans. Institutions and companies could resort to bank borrowings or, for companies, possibly a share issue. But all three can also raise money by issuing Loan stock known as Bonds.
UK Government Bonds have traditionally been known as Gilts as they were recorded in a Gilt edged register, and other names such as Fixed Interest Stock or Loan Stock are also used.
Corporate Bonds are typically a type of fixed interest security, which is in effect a method of 'lending' money to the government or a company. When you invest into a corporate bond fund we lend your money to companies who will then agree to pay interest on the amount over a certain period of time. Corporate bonds are issued by different companies at varying rates of interest. Generally speaking, the more secure a company is, the lower the rate of interest it will need to attract investors. You should also remember that your investment is not guaranteed and the value may fall as well as rise.
For more information on corporate bonds and the best way to invest in them please speak with an investment advisor
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