Investment-grade Corporate Bonds?

Charles Fell has an article in the Times this morning about 'Investment-grade Corporate Bonds'. Can anyone provide more info on them & how they work? Are they company shares under another alias?

Corporate bonds are debt issued by companies. They pay a fixed coupon each year and then repay the principal at the end of the term, so if you buy a 6% 10 year bond, you get a 6% payment each year and your money back at the end of the ten years.

As far as I can see, it is quite difficult to buy them without using a fund. An example of a fund would be:
[broken link removed]

Note that the risk of corporate bonds increases in recessionary times as teh chances of the company that issues them goes bust. This is why the yields (the difference between the price you pay for the bonds and the coupon) increase. Currently for short-term General Motors bonds you can get yields in the 30-100% range! (It means the perception in the bond market is that the company is about to go bust!). So I wouldn't go all in on them! There is also the danger that a company that was previously rated as investment grade (A- or above, I think) is downgraded to junk (BBB) or just to a lower investment grade. This will result in a loss if you have to sell the bonds before the term is due, but shouldn't make a difference if you hold them to maturity (assuming the company doesn't go bust).

Disclosure: No connection with Rabo and no investments in corporate bonds at the moment. Strictly small amount amateur investor - nothing I say should be taken as advice!

Pretty much as above but just to clarify anything above BBB- is considered investment grade for bonds.

You can buy them through a stockbroker but you should be aware of a few things. The credit risk as mentioned above is a major factor. Also because many of these bonds pay fixed coupons, you are exposed to interest rate risk i.e. as rates fall, the bond price will rise and vice-versa. Some issuers have Floating Rate Notes which refix every three to six months to the current Euribor fixing so interest rate risk is pretty much removed.
Also bear in mind that they are not as liquid as shares. The bond market has pretty much dried up over the past few months. Another thing to consider is from a tax prespective. They are not tax efficient for the top tax rate paying individuals as you will pay that tax rate on the coupon (interest) you receive.