A bond that is issued by companies (operating in the private sector) as distinguished from those issued by government or government agencies (government bonds) such as T-bonds. Companies issue corporate bonds to raise funds for multiple purposes, such as expansion and growing the business (constructing new plants, purchasing equipment, etc.)

Corporate bonds represent debt obligations of the issuer (issuing company) whereby it is obliged to repay the face value (par value) of the bond, i.e., its principal, on the contractually set maturity date. Over the life of the bond, the issuer pays the bondholders a stated rate of interest, on a regular basis (e.g., quarterly, semiannually, etc.)

A corporate bond is a type of fixed income security (debt security) that only entitles its holder to receive the stated rate on regular dates, but not an ownership stake in the company.