Corporate Bonds

Corporate Bonds are similar to Gilts, and work in much the same way, however Corporate Bonds, as the name suggests, are issued by multinational companies as opposed to Governments. They do this as a cheaper form of borrowing than a bank loan and often offer better returns than Government Gilts. They have to because the risk of a corporate going bankrupt, even a multinational one, is greater than the risk of a Government being unable to repay its debt.

Corporate Bonds are usually invested in by fund managers and other 'professionals' and as per Gilts, they usually do this to produce income and/or spread risk.