A bond is a way that companies can raise funds. Essentially, when you buy a bond you're lending your money to that company. In return, the company is legally obliged to pay you interest and we call this a coupon. When the bond matures, assuming the company is still solvent, it repays back face value of the bond, which is typically a hundred dollars.

Corporate bonds are issued by many companies from very large ones such as Commonwealth Bank, BHP and Qantas, to smaller ones such as GA Education and IMF Bentham. Corporate bonds can be issued in Australian dollars but also in foreign currencies.

There are many different types of bonds. The most common ones are firstly, a fixed rate bond, which pays a fixed rate of interest for the life of the bond and secondly, floating rate bonds that's typically tied to moving benchmarks such as the bank bill swap rate or libor but then have a fixed margin on top of that moving rate.

Also, there are inflation linked bonds, which provide a hedge against inflation.