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What are the different types of corporate bonds?

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Quick Answer

Corporate bonds include guaranteed bonds, income bonds, zero-coupon bonds, speculative bonds and Eurobonds, explains Investopedia. There are also Yankee bonds, repurchase agreements, federal funds, corporate commercial paper notes and bankers' acceptances. The categories of bonds differ based on the risk, return and issuer of the bond.

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Full Answer

A guaranteed bond is issued by one company and insured by a different company, notes Investopedia. Income bonds only pay interest when the company's earnings cover its costs. Zero-coupon bonds are sold at a discount and paid back in full. Speculative bonds, also called junk bond, are high-risk bonds with a chance at a very high return. Eurobonds are sold outside of the bounds of a specific country's regulation, while Eurodollar bonds are U.S. dollar bonds held outside of the United States by foreign institutions.

Yankee bonds are issued in the United States by foreign institutions, explains Investopedia. Repurchase agreements, also called repos, are basically short-term bonds paid back with a premium rather than an interest rate. Corporate commercial paper notes are unsecured bonds that usually mature within a month and are used to raise cash for immediate needs. Negotiable CDs are insured deposits that have a fixed-rate, a low risk and low returns. Bankers' acceptances, also called BAs, are short-term bonds issued in good faith by bankers.

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