Currently the economy of companies varies a lot, which is why some decide to sell or buy bonds. That is, a recipient of bonds to obtain this, makes a monetary investment to the company that offers a bond with some value in the finance market, as a guarantee of the return of said investment plus agreed interest both sides.
You have to evaluate very well when buying a bond, since nowadays there are numerous offers even on the internet, some very good and others not so much. To choose a good decision it is necessary study in depth the institution in which your investment will be deposited.
exist various risks at the time of buying bonds, since if the issuer of the bond closes his company or business, the investor may be subject to not recovering any of the interest or the invested capital.
The same would happen if the company issuing the bond goes through a crisis that weakens its ability to generate cash flow. The ideal when investing in a corporate bond is to look for those issued by large companies or those of recognized solvency.
What is a corporate bond?
A bond means the loan that an entity makes to a company or institution, on the condition that it be returned together with its interests within a period stipulated by both parties. The purchase of corporate bonds It has become one of the best options to invest money and multiply it.
It is very common for this type of financial instrument to be issued in order to finance certain necessary situations for which the party that issues it does not have sufficient resources to employ, either short or long term. The purpose of these bonds is to obtain resources directly from the stock market.
The value of the bonds can be manifested in any national or foreign currency. The cancellation period for this must be greater than one year. Evaluating these situations is one of the advantages of financial statement analysis.
Explained from another perspective, the bond can be defined as a power that the investor will be able to negotiate in the Stock market.
Benefits of a corporate bond for companies
With corporate bonds of companies it is easier to determine and analyze the possible return on invested capital and find out if it is really worth investing in this one. Which makes it a much more attractive investment than sovereign bonds.
Recipients of corporate bonds, that is, investors, acquire this document after they make the investment, and many of these bonds can be traded in secondary markets, which is a great benefit because investors can benefit from the sale of this when its value rises.
It is important to note that a corporate bond is not the same as stocks or mutual funds. exist certain characteristics that differentiate them from each other.
Process for issuing corporate bonds in a company
When a company or business needs a third party financial support, it resorts to the sale of bonds. That is, it issues documents that grant the investor some kind of power over certain active securities as a guarantee that their investment will be returned. Otherwise, the recipient of the bond will be able to make use of it by selling it in secondary markets.
For the issuance of corporate bonds, you must first study and formulate the order of the issuance of these and the difference between economic investments and financial investments it is recommended that this be together with a professional. Then ensure that your investor buys the bond and turns over his earnings to the company.
After that we proceed with the due documentationThis must be prepared by a lawyer, preferably an expert in the subject, to take care of all aspects of the financing of the legal bonds.
Finally, the closing, here is assigned by the administrator, which is generally a bank chosen by the issuer of the bond, which will be in charge of dividing and distributing the earnings of these bonds together with the payment of the debt of the issuer with the financier.