Corporate Bond is a debt instrument issued by a company to raise long-term capital from investors. Companies use corporate bonds to finance expansion, acquisitions, or other business activities without diluting ownership through equity. Investors who purchase these bonds lend money to the issuer in exchange for periodic interest payments and the return of principal at maturity.

Corporate bonds differ from government securities as they carry higher risk due to the possibility of default, but they usually offer higher returns through fixed or floating interest rates. The interest rate, also known as the coupon rate, and the bondís credit rating are critical factors that determine the attractiveness of a corporate bond to investors. Higher-rated bonds are considered safer, while lower-rated bonds provide higher yields to compensate for increased risk.

These bonds can have different features, including fixed or floating coupon rates, callable or non-callable options, and varying maturities. Callable bonds allow the issuer to repay the bond before maturity, providing flexibility in managing debt under favorable interest rate conditions. Investors must evaluate these features carefully to match their investment goals, risk tolerance, and liquidity needs.

In India, corporate bonds are regulated by the Securities and Exchange Board of India (SEBI). SEBI mandates disclosures on issuance, credit ratings, and investor protections to ensure transparency and fairness. Corporate bonds can be traded on stock exchanges or over-the-counter (OTC), providing liquidity and opportunities for portfolio diversification.

In summary, a corporate bond is a debt security issued by a company to raise funds, offering investors periodic interest income and principal repayment at maturity. Understanding the types, risks, and regulatory framework helps investors make informed decisions, manage credit exposure, and participate confidently in Indiaís debt markets.