Corporate bonds are a financial tool that a corporation uses to raise funding. They are an alternative to acquiring loans from a bank or issuing shares of stock. Corporations use the money from bond sales to finance a variety of improvements, like business growth, new factories, or new equipment. When an investor buys a corporate bond, he is essentially buying an IOU from the corporation that is to be paid back after a pre-determined time (the maturity date). The bond will also typically pay coupon payments, which are interest-based payments made to the bondholder at regular intervals (usually semi-annually).[1] X Trustworthy Source Investor.gov Website maintained by the Securities and Exchange Commision’s Office of Investor Education and Advocacy providing free resources about investing. Go to source Corporations usually enlist the help of investment banks, which function as underwriters, to organize the creation, marketing, and sale of the bonds.