How to Buy Individual Corporate Bonds

by Kimberlee Leonard ; Updated July 27, 2017

Corporate bonds are a type of investment where the investor becomes a lender to the corporation. In return, the corporation promises to give a specified interest rate to the investor for the time the bond is effective. Many investors buy bonds through mutual funds, but individual corporate bonds can be purchased through a brokerage firm or directly from the corporation's transfer agent. Price quotes for bonds are given based on $100 increments even though most corporate bonds trade in $5,000 increments.

Step 1

Call the corporation's investor relations department for the company you want to buy the bond from. This information is available on most corporation websites. Ask whether the company is having any bond offerings upcoming and get the information from the transfer agent.

Step 2

Call the transfer agent regarding the upcoming bond offering. Explain that you are seeking to buy the corporate bond directly from the offering and ask what the minimum requirements are and the process of obtaining and paying for the bond. Some offerings require buyers to obtain a "lot" of bonds, which may be 100, 1000 or more; make sure you can buy the bond directly.

Step 3

Follow the instructions of the transfer agent if you qualify to buy the corporate bond when it is issued. Buy the bond and pay for it as directed by the issuer.

Step 4

Open a brokerage account if you are unable to purchase the bond at the time of issue in the primary market. Ask your bank, tax adviser or insurance agent for firm referrals if you are unsure of where to go.

Step 5

Call the broker or customer service department of the brokerage firm you open the account with. Place an order for the bond you want to buy and send the in the money to cover the cost of the bond and transaction fees quoted by the representative.

Warnings

  • Bonds are not FDIC insured and have risks involved. Speak with an investment adviser regarding any questions or concerns you have regarding bond risks.

About the Author

With more than 15 years of professional writing experience, Kimberlee finds it fun to take technical mumbo-jumbo and make it fun! Her first career was in financial services and insurance.