Corporate bonds
Fixed-interest securities issued by large companies with the capacity to issue them. Their price usually closely follows the share price of the respective issuer. The term ranges from three to thirty years. In Germany, corporate bonds accounted for a total of only six percent of gross domestic product in 2005, compared with around twenty percent in the USA. – Nominally well-endowed bonds issued by Fallen Angels – in the USA: Enron, WorldCom – plunged in some cases below the price of penny stocks. – In the wake of the financial crisis that followed the subprime crisis, there was an increase in the issuance of corporate bonds. The early securing of follow-up financing probably played a role in this. Companies with access to the capital market can bypass banks in this way and obtain financing directly from investors such as funds and insurance companies. This helps to consolidate the supply of external funds. Admittedly, the corporate bond route remains largely closed to the majority of small and medium-sized firms. – See bond, high yields, corporate bond, Kliff effect, yield gap, corporate investment company, national economy, bank-based, yield-to-call, subscription period. – Cf. in detail Deutsche Bundesbank Monthly Report of April 2004, p. 15 ff., ECB Annual Report 2003, p. 32 f., Deutsche Bundesbank Monthly Report of July 2004, p. 45 (statistics), Deutsche Bundesbank Monthly Report of August 2005, p. 38 (yield spread between government bonds and corporate bonds), ECB Monthly Report of September 2005, p. 35 f. (charts on the yield spread in the euro area, linked to the respective credit rating), BaFin Annual Report 2009, p. 24 (spreads of European corporate bonds since 2005), pp. 186 ff. (market manipulation in corporate bonds uncovered; overview; individual cases), and the respective BaFin Annual Report, chapter „Supervision of securities trading and investment business,“ ECB Monthly Report of June 2013, pp. 49 f. (important reasons for corporate bond yield spreads).
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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