Private-sector bonds are debt securities issued by companies to raise capital for business operations, expansion, or refinancing existing debt. Unlike government bonds, these carry higher risk due to the possibility of default but often offer higher interest rates to attract investors. They come in various forms, including corporate bonds, convertible bonds, and high-yield bonds, each differing in terms of risk, maturity, and returns. Investors buy these bonds to earn regular interest payments and potentially profit from price appreciation. Private-sector bonds play a crucial role in corporate finance, enabling companies to access funds without diluting ownership through equity issuance.
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