Why Do Companies Issue Bonds?

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Companies issue bonds to raise money to buy equipment, to retool, to remodel buildings and to expand. Find out when a person can expect to get their money back from a company-issued bond with help from a licensed financial planner in this free video on bonds and investing.

Part of the Video Series: Bond Investing
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Video Transcript

Hello, my name is Bill Rae. I'm with Alumnae Financial Services. I've been in the business in the finance world for well over twenty years and your question is, "Why do companies issue bonds?" Well, that's an excellent question. First of all I suppose, you should understand a bond in the finance world is a debt security in which an authorize issuer owed, owes the holder a debt. Fancy way of saying, " I need to borrow money and I agree to pay you back with interest." Now, why would a corporation issue bonds? Well, it is a good way for them to raise money if they need to buy equipment for expansion; if they need to retool if you will or redo their buildings. When the auto manufacturers are looking to, as they call, retool or do over one of their factories, that's a good way they can raise money. Bonds can be tracked; bonds can be sold and you can find the ratings as to how well that company performs at places such as modis. There are many online that you can check out to find out the bond you're looking at is worth investing. But as always, we recommend you fully understand any contractor agreement you're about to get into. Understand what monies are ask of you, when and how you can get your money back and what interest rate you can expect on the return of your money. We also always advice that you seek out competent advice; seek out a license professional. My name is Bill Rae. I'm with Alumnae Financial Services and as always, we're here to help you build wealth.


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