Corporate bonds
Understand why corporate credit risk: companies can go bankrupt, cease operations, or restructure debt at haircuts to bondholders.
In this lesson
Corporate bonds is part of Stocks and Bonds Basics. This preview shows how investment-universe connects to everyday family decisions such as earning, saving, spending choices, goals, approvals, or parent-guided money conversations inside Progress Penguin.
Think about this money choice
Imagine this situation: Dangote Group issues a bond at 18% APR. The FGN bond rate is 12%.
How it works
Corporate credit risk: companies can go bankrupt, cease operations, or restructure debt at haircuts to bondholders. Government default risk exists but is far lower in practice. This additional credit risk is why corporate bonds must offer higher yields than comparable government bonds — the credit spread.
Apply it to a real decision
Real-life money moment: Dangote Group issues a bond at 18% APR. The FGN bond rate is 12%. The 6% difference is called what and why does it exist? The key lesson is: The credit spread is the compensation for additional risk.
Activity preview
Apply the idea
Use the lesson to complete this short practice activity.
Try one real money action
Open Tasks and submit proof for one task, or open Requests and make a deposit request. Parent approval can happen later.
Quiz preview
Compared to government bonds, corporate bonds usually:
Dangote Group issues a bond at 18% APR. The FGN bond rate is 12%. The 6% difference is called what and why does it exist?