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Duration: 3:09

Instructor:

Contributor: Interactive Brokers

Level: Beginner

This lesson provides an overview of what to expect from the introductory course on U.S. corporate bonds.

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Study Notes:

While investing in corporate bonds is generally considered a more conservative approach than buying stocks, holders of these debt instruments still face a variety of risks.

Many of these risks are tied to the types of corporate debt available to purchase, including:

  • Secured and unsecured notes,
  • Eurodollar or Yankee bonds, as well as
  • Convertible debt and green bonds, to name just a few.

Since investing in corporate bonds is focused more on income generation and capital preservation rather than on growth, investors in this asset class will likely be most concerned with asking:

‘Will I get my principal back when the bond matures’, and  

‘Will I receive timely interest payments over the course of its lifetime?

To assess these risks, corporate bond investors typically conduct an analysis of the issuing company, as well as the many catalysts that may hamper its financial and operational performance, to gauge the likelihood of its potential for default.

For example –

Did you know that if a company fails to make timely interest payments to a bond holder, the firm is said to be in default on the loan, and that the type of corporate debt that is held – whether secured or unsecured – may dictate whether you receive what is owed to you in the wake of its bankruptcy? 

In this course, we’ll cover factors such as these, as well as many others.

To become more familiar with certain terms and their meanings in the corporate bond market, we’ll explore ways in which you can:

  • Identify threats to the value of your investment,
  • Conduct due diligence,
  • Find and read company prospectuses,
  • Determine the level of the issuer’s creditworthiness and how that may change over time, as well as
  • Understand pricing and performance in the primary and secondary markets, and

Learn more about recent developments that have changed the supply and demand dynamics for these fixed income assets.

IBKR TWS

There, you can locate certain corporate bonds that are available to trade in the secondary market using the IBKR Bond Scanner.

In the next chapters of the course, we’ll dive more deeply into default risk and how interest rates and credit can impact the value of corporate bond investments, and for your studying strategy, you may wish to revisit previous lessons to bolster and enhance your understanding of the many facets that comprise the corporate bond market.

After reviewing, you’ll find a quiz below each lesson, along with a final exam at the end of the course; and to further reinforce your understanding, we’ve included study notes and additional information right alongside.

Please keep in mind that as you review this course that this material does not, and is not, intended to take into account your particular investment needs. Before acting on this material, you should consider whether it is suitable for your financial conditions, investment objectives or other requirements.

Disclosure: Interactive Brokers

The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Supporting documentation for any claims and statistical information will be provided upon request.

Any stock, options or futures symbols displayed are for illustrative purposes only and are not intended to portray recommendations.

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