Corporate bonds are debt securities issued by private and public corporations. Companies issue corporate bonds to raise money for a variety of purposes, such as building a new plant, purchasing equipment, or growing the business.
When you buy a corporate bond, you lend money to the "issuer," the company that issued the bond. In exchange, the company promises to return your money, also known as "principal," on a specified maturity date. Until that date, the corporation usually pays you a stated rate of interest, generally semiannually. While a corporate bond gives you an IOU from the company, you do not have an ownership interest in the issuing corporation - unlike when you purchase the company's stock.