Can the interest on corporate bonds change or be canceled once you buy them?
April 13, 2009 by How Savings Bonds Work
Filed under More Bonds Answers
Can you answer sonwitch106’s question about Bonds?:
Once you buy a corporate bond, can the interest be lowered or be canceled?
Tax Free Government Bonds
Once you buy a corporate bond, can the interest be lowered or be canceled?
Tax Free Government Bonds
Bonds Feedback: no it cannot be lowered or canceled. however, corporate bonds are more riskier than other bonds. thats why you have a higher yield
Bonds Feedback: The yield depends on the type of bond. If the bond were a variable yield bond, then yes, the interest rate could change, so it depends on what type on coupon you are holding. In general though, bonds, especially corporate debt, are fixed rate.
Corporate bonds, in general though, are riskier investments, they have a higher rate of default than other types of bonds (like muni) which is why they offer higher rates of return to the people willing to buy them.
Bonds Feedback: Its possible for corporate bonds to have a variable rate. But mostly the interest rate is fixed. There is is a possibility of default which is priced into the yield. However corporate bonds are sometimes callable. It may be called before maturity if interest rates decrease, so the company can issue bonds at the lower rate saving money on interest payments.