For a much more in depth understanding of ratings, and how to use them to enhance yields while avoiding costly mistakes, call for our free educational report An Inside Look at the Rating Game.

Corporate bonds are debt obligations, or IOUs, issued by private and public corporations. They are typically issued in multiples of $1,000 or $5,000. Companies use the funds they raise from selling bonds for a variety of purposes, from building facilities to purchasing equipment to expanding the business.

When you buy a bond, you are lending money to the corporation that issued it, which promises to return your principal, on a specified maturity date. Until that time, they pay you a stated rate of interest, monthly, quarterly or semiannually. The interest payments you receive from corporate bonds are taxable.

The corporate bond market is large and liquid, with daily trading volume estimated at $10 billion. The total market value of outstanding corporate bonds in the United States is approximately $2.1 trillion.

Investors buy and sell corporates in two different markets. Debt issues of major corporations are traded daily on the New York Stock Exchange (NYSE). In fact, there are more corporate bonds listed on the exchange than stocks. Bond dealers and brokers also trade corporate debt in the over-the-counter (OTC) market. The OTC market is much larger than the exchange market and it has no central location. Most bond transactions, even those involving listed issues, take place in this market.

Attractive yields: Corporates offer much higher yields than government bonds or CDs of comparable maturity.

Dependable income: Corporates provide steady income for investors in addition to preserving their principal.

Safety: Corporate bonds are evaluated and assigned a rating based on credit history and ability to repay obligations. The higher the rating, the safer the investment. Debt obligations of Blue Chip companies are considered to be the most secure corporate investments.

Diversity: Corporate bonds are available in a variety of sectors, structures and credit-quality characteristics to meet almost any client's investment parameters.

Marketability: Due to the size and liquidity of the market, those investors who do not wish to hold their bond to maturity have little trouble selling their bonds in the open market.

If you are interested in Corporate Offerings please click the Corporate Offerings tab. If you do not see the securities you are seeking or are interested in updates of new issues please email us at sales@stoeverglass.com or call us at 1-800-223-3881 and a Stoever Glass representative would be glad to assist you.

Another type of quasi government security is the debt issued by certain U.S. government agencies in order to finance activities supported by public policy. These agencies include the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), the Federal Home Loan Banks, and the Student Loan Marketing Association (Sallie Mae) to name a few. These issuers make credit available to sectors of the economy that may not otherwise be able to afford the costs of financing.

Although these agencies are not backed by the same "full faith and credit guarantee" as Treasuries, their credit quality is almost as good as treasuries because of their government-sponsored status. However the Government Agencies offer much higher yields than Treasuries. This market functions with a maximal level of efficiency and liquidity due to the high degree of demand. Interest received from these securities is subject to federal taxes and exemption from state taxes varies from agency to agency.

A CMO is a slice, or tranche, of cash flow from the mortgage pools of the various Federal Agencies shown above. The CMO structure funnels principal payments and pre-payments from a pool of mortgages to various classes of securities in a specific priority order. Each tranche has a different rate of interest, repayment schedule, and priority level. These securities have become very popular because investors can choose the yield, maturity structure, and risk exposure that best meets their needs. CMOs combine the best qualities of mortgage-backed securities, their high yields and high quality, with the attractive qualities of bonds, the fixed interest returns and relatively fixed repayment terms.

For many investors, CMOs are an excellent alternative to government securities. CMOs are created from government agency mortgage backed securities and as such they provide security comparable to government agency bonds, yet offer much more attractive yields. CMOs are ideal for investors looking for conservative additions to their retirement accounts. For instance, an investor considering a 30-year Treasury bond may instead choose a 30-year CMO with a 2% higher return. This is an attractive alternative, provided you can assume the risk of possible premature repayment of principal.

If you are interested in Collateralized Mortgage Obligation (CMO) offering, please click

the Federal Agencies/CMO Offerings tab. If you do not see the securities you are looking for, please email us at sales@stoeverglass.com or call us at 1-800-223-3881 and a Stoever Glass representative would be glad to assist you.