Corporate Bonds are issued by public sector undertakings and private corporations for a wide range of tenors but generally up to 15 years. But, some Banks and Companies like Reliance have also issued Perpetual Bonds.
Compared to government bonds, corporate bonds usually have a higher risk of default. This risk depends, of course, upon the particular corporation issuing the bond, its rating, the present market conditions and the sector in which the Company is operating. Corporate bond holders are remunerated for this risk by receiving a higher yield than government bonds. A number of corporate bonds have an embedded call option that allows the issuer to redeem the debt previous to its maturity date. Some even carry a put-option for the profit of the investors. Other bonds, known as convertible bonds, permit investors to convert the bond into equity.
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