Capital Bonds (also known as Corporate Bonds) have become an ever more popular way of raising capital by companies seeking funding as interest returns on these types of investments are typically much higher than those offered by high street banks.
Although investment returns can potentially be higher, this type of investment can also be considered much riskier. This is why investors choosing unregulated bonds should always consider the associated risk factors before deciding to invest in Capital Bonds.
Capital Bonds offer an alternative way to invest. They tend to be preferred by investors who dislike the instability of the stock market and want more predictable returns. Capital Bonds do not give ownership rights to investors unless such bonds give the holder an option to convert. These bonds have defined time periods in which income can be expected.
Purchasing Capital Bonds can be compared to providing a loan to a company. Based on the type of Capital Bond purchased, investors typically receive periodic interest payments. They also have a defined redemption term which can vary, however, most Corporate Bonds offer a maturity date of between one and five years.