What Are Some Low-Risk Ways to Buy Corporate Bonds?


Quick Answer

Corporate bonds that have received a AAA credit rating from rating agencies such as Standard & Poor's or Moody's are considered to be safer than those with low credit ratings. This is because the issuing corporations have been found to have a higher likelihood of debt repayment.

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Full Answer

A corporate bond is a debt obligation issued when money is lent to a company, according to the Security and Exchange Commission’s Office of Investor Education and Advocacy. The bond issuer then, as a part of the issuance of the bond, commits to repay the original sum of money, known as the principal, along with any agreed upon interest that has accrued. The SEC reports that money corporations receive from bond sales typically goes toward activities such as the purchasing of new equipment, research and development, and the refinancing of other debts.

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