The variety of issuers is immense. Because of this, risk and promised return can vary greatly. Risk is occasionally ameliorated by the issuer s purchase of a credit enhancement. A prime feature of these securities is their tax-advantaged status. This feature results in lower yields than would be expected if only risk was considered.
Corporations are the third major source of debt securities.
Since firms lack taxation powers, their bonds are inherently more risky than Treasuries. Beyond this, the range of risk levels is quite varied. Some issues add convertibility options. Most trading of corporates takes place in the OTC market. The new security may possess very different attributes from the underlying assets.