What are corporate bonds?
Bonds issued by German or international companies or foreign subsidiaries of German companies are called ‘corporates’ or ‘corporate bonds’. They account for the lion’s share of all bond trading at Boerse Stuttgart, Germany’s biggest marketplace for exchange-based trading in bonds.
Industrial companies often issue bonds as an alternative to the traditional method of borrowing money from banks. As a rule, corporate bonds are not subject to the provision of additional collateral. The creditworthiness of the individual company influences the coupon (interest rate) to be paid on the bond. The rating attached to an issuer or its bonds also has an impact on the terms and conditions of the bonds. For example, a bond with a first-class rating will have a lower yield than bonds with a poor rating.