Corporate Bond Quotes & Sayings

A credit default swap was confusing mainly because it wasn't really a swap at all. It was an insurance policy, typically on a corporate bond, with semiannual premium payments and a fixed term. For instance, you might pay $200,000 a year to buy a ten-year credit default swap on $100 million in General Electric bonds. The most you could lose was $2 million: $200,000 a year for ten years. The most you could make was $100 million, if General Electric defaulted on its debt any time in the next ten years and bondholders recovered nothing. It was a zero-sum bet: If you made $100 million, the guy who had sold you the credit default swap lost $100 million. It was also an asymmetric bet, like laying down money on a number in roulette. The most you could lose were the chips you put on the table; but if your number came up you made thirty, forty, even fifty times your money. — Michael Lewis

Unlike common stocks, whose dividends and earnings fluctuate with the ups and downs of the company's business, bonds pay a fixed dollar amount of interest. If the U.S. Treasury offers a $1,000 20-year, 5 percent bond, that bond will pay $50 per year until it matures, when the principal will be repaid. Corporate bonds are less safe, but widely diversified bond portfolios have provided reasonably stable interest returns over time. — Burton G. Malkiel

Apple raised $17 billion in a bond offering in 2013. Not to invest in new products or business lines, but to pay a dividend to stockholders. The company is awash with cash, but much of that money is overseas, and there would be a tax charge if it were repatriated to the USA. For many other companies, the tax-favoured status of debt relative to equity encourages financial engineering. Most large multinational companies have corporate and financial structures of mind-blowing complexity. The mechanics of these arrangements, which are mainly directed at tax avoidance or regulatory arbitrage, are understood by only a handful of specialists. Much of the securities issuance undertaken by Goldman Sachs was not 'helping companies to grow' but represented financial engineering of the kind undertaken at Apple. What — John Kay

...it reveals the legacy of an environmental catastrophe, its human tolls and triumphs, its corporate greed and indifference, its governmental lapses and neglect. In its historic sweep, it stands as a cautionary tale -- timeless and time-bound -- in a country divided by class and religion, buffeted by corporate misconduct, and dismantling its environmental protection laws. This is the story of a dying coal town ensnared in the Reagan Revolution's afterbirth, of a small community rent by one of the mining industry's worst disasters, and of the irreplaceable bond of home. — Joan Quigley

Thus a long term corporate bond could actually be sold to three separate persons. One would supply the money for the bond; one would bear the interest rate risk, and one would bear the risk of default. The last two would not have to put up any capital for the bond, though they might have to post some sort of collateral. — Fischer Black

The price earning multiple must be less than ten or the inverse of the long term corporate bond rate, whichever is the less. — Peter Cundill