When friends ask me what are corporate bonds, I usually start with a scene they recognise. Imagine a company that wants to expand—open a new plant, refinance costlier debt, or fund an acquisition. Instead of taking a bank loan, it can borrow directly from investors like you and me by issuing a bond. I lend the company money today, and in return I receive periodic interest (the coupon) and my principal back on a fixed maturity date. That’s a corporate bond in one line: a tradable IOU with a schedule.

The appeal, for me, is the visibility. Before I invest, I know three crucial details: the coupon rate and how often it’s paid, the maturity date, and the bond’s seniority or security (is it backed by assets or cash flows, and where does it sit in the repayment order?). Because these are spelled out upfront, I can match cash flows to real goals—school fees next year, a home renovation two years out—rather than hoping markets are kind at the right moment.

Returns, however, hinge on more than the headline coupon. If I pay more than face value (a “premium”), my actual return can be lower than the coupon because the bond “pulls to par” at maturity. If I buy below face value (a “discount”), the reverse can happen. That’s why I focus on yield to maturity (YTM): the single, annualised return that assumes I hold till maturity and receive every coupon on time. When I compare options, I bring everything to YTM so I’m not fooled by glossy coupons.

Risk is the trade-off for return. With corporate bonds I’m lending to a company, so credit risk matters: if finances weaken, interest or principal could be delayed. Ratings help, but they’re opinions, not guarantees. I read the rating rationale, check leverage and interest coverage, and pay attention to whether the bond is secured and the quality of that security. Interest-rate risk matters too—bond prices fall when market yields rise and vice versa—so for near-term goals I prefer shorter maturities to keep price sensitivity low. Liquidity is practical: some series trade actively, others are thin, and that affects my ability to exit early at a fair price.

So where do corporate bonds fit in Bonds investment in india? I use them as the middle layer between equity’s growth and a fixed deposit’s stability. High-quality public-sector and top-tier financial issuers form my core because they add predictability. I then add carefully chosen NBFC or infrastructure names for a bit more yield, but I size those positions modestly and diversify across issuers and sectors. If a bond is callable (the issuer can redeem early), I check yield to call as well, because high-coupon paper often gets called when rates drop.

Buying has become far simpler. Public issues—often called NCDs—let me apply at face value, while listed bonds can be purchased on regulated platforms with transparent documentation. My routine is plain: filter by rating and tenor, compare YTM (not just coupon), scan the prospectus for covenants and security cover, check recent trading volumes, and only then place an order. After purchase, I keep a simple ladder of maturities so principal returns periodically for reinvestment or expenses.

If you started reading this wondering what are corporate bonds, the takeaway is straightforward. They’re scheduled, contract-based cash flows you can tailor to your calendar. Used with discipline—post-tax YTM in hand, credit checked, and maturities staggered—corporate bonds become the quiet engine of a long-term plan, helping Indian savers build wealth methodically while keeping risk visible and manageable.