Corporate Bond

Municipal bond - Comparison to corporate bonds 1 Because municipal bonds are most often tax-exempt, comparing the Coupon (bond)|coupon rates of municipal bonds to corporate or other taxable bonds can be misleading. Taxes reduce the net income on taxable bonds, meaning that a tax- exempt municipal bond has a higher after- tax Yield (finance)|yield than a corporate bond with the same coupon rate.

Municipal bond - Comparison to corporate bonds 1 A municipal bond that pays 6.2% therefore generates equal interest income after taxes as a corporate bond that pays 10% (assuming all else is equal).

Municipal bond - Comparison to corporate bonds 1 The marginal tax rate t at which an investor is indifferent between holding a corporate bond yielding rc and a municipal bond yielding rm is:

Municipal bond - Comparison to corporate bonds 1 All investors facing a marginal rate greater than t are better off investing in the municipal bond than in the corporate bond.

Municipal bond - Comparison to corporate bonds 1 Alternatively, one can calculate the taxable equivalent yield of a municipal bond and compare it to the yield of a corporate bond as follows:

Municipal bond - Comparison to corporate bonds 1 Because longer maturity municipal bonds tend to offer significantly higher after-tax yields than corporate bonds with the same credit rating and maturity, investors in higher tax brackets may be motivated to arbitrage municipal bonds against corporate bonds using a strategy called municipal bond arbitrage.

Corporate debt - Other risks in Corporate Bonds 1 -Default Risk has been discussed above but there are also other risks for which corporate bondholders expect to be compensated by credit spread. This is, for example why the Option Adjusted Spread on a Ginnie Mae MBS will usually be higher than zero to the Treasury curve.

Corporate debt - Corporate bond indices 1 Corporate bond index|bond indices include the Barclays Corporate Bond Index, SP U.S. Issued Investment Grade Corporate Bond Index (SPUSCIG), the Citigroup US Broad Investment Grade Credit Index, and the Dow Jones Corporate Bond Index.

Corporate debt - Corporate bond market transparency 1 A combination of mathematical and regulatory initiatives are aimed at addressing pre-trade transparency in the U.S. corporate bond markets.

Corporate bond 1 A 'corporate bond' is a Bond (finance)|bond issued by a corporation. It is a bond that a corporation issues to raise money effectively in order to expand its business. The term is usually applied to longer-term debt instruments, generally with a maturity date falling at least a year after their issue date. (The term commercial paper is sometimes used for instruments with a shorter maturity.)

Corporate bond 1 Sometimes, the term corporate bonds is used to include all bonds except those issued by governments in their own currencies. Strictly speaking, however, it only applies to those issued by corporations. The bonds of local authorities and supranational organizations do not fit in either category.

Corporate bond 1 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 (finance)|over-the-counter markets.

Corporate bond 1 Some corporate bonds have an embedded call option that allows the issuer to redeem the debt before its maturity date. Other bonds, known as convertible bonds, allow investors to convert the bond into equity.

Corporate bond 1 Corporate Credit spreads may alternatively be earned in exchange for default risk through the mechanism of Credit Default Swaps which give an unfunded synthetic exposure to similar risks on the same 'Reference Entities'. However, owing to quite volatile CDS 'basis' the spreads on CDS and the credit spreads on corporate bonds can be significantly different.

PetroChina - Corporate bonds 1 PetroChina, on issued an 80 billion yuan ($11.7 billion) of medium-term corporate bonds, which was the biggest ever domestic issue by a listed company.[ sh/ /21/content_ htm]

For More Information, Visit: m/the-corporate-bond- toolkit.html m/the-corporate-bond- toolkit.html The Art of Service