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The Market for Borrowing Corporate Bonds - Essay Example
Finance & Accounting
Pages 8 (2008 words)
The corporate bond market contains those debt securities which are issued by corporations and sold to investors to raise operating capital. Corporate Bond markets acts as facilitators in issuing and trading debt securities…
An efficient corporate bond market will lead to the efficient allocation of investment funds. An efficient market will also lead to investments in riskier assets. The types of securities which can be issued in the corporate bond market are debentures, unsecured notes and subordinated debt. One of the major reasons for developing a corporate bond markets is that the bond market provide an alternative solution or source for operational funds for the private sector other than borrowing from the equity markets and banks. This helps in improving the financial stability and allocation of credit.
Companies running successfully can decide to expand their activities and commence new projects. To raise capital the company can decide on raising the funds from the corporate bond market as it can be beneficial for the company in the long run.
The following sections give a detail understanding of corporate bonds. These sections describe the types of securities that can be issued in the corporate bond market, the types of companies that can issue it, the benefits of issuing bonds over other sources of finance, the providers of debt and their requirements. This information will certainly help the Board of Directors to reach a decision regarding the use of corporate bonds for raising capital to finance the new project. ...
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