Fidelity Corporate Notes Program - Buy Bonds Direct
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Clicking a link will open a new window. CorporateNotes ProgramSM
This program allows you to buy new issue corporate bonds directly from the issuer in $1,000 increments. Because they have yet to accrue any interest, you pay par. Bonds in this program can be either fixed rate or adjustable rate securities. Corporate notes are unsecured senior or subordinated issues. Take advantage of opportunities to purchase corporate notes and other new issue fixed income taxable securities. What are the benefits
Offered at par value Once the issuers post a notice of availability, issues are typically available for one week. During this period or prices generally do not change. However, the issuers may change or cancel offerings without notice. No transaction costs The issuer pays a sales concession to the offering broker dealer on new issue securities, which means that customers buying CorporateNotes through Fidelity are not charged a mark-up or commission on their purchase. Call protection options Corporate notes are offered in both non-callable (call protected) and callable (not call protected) form. Bonds that are not call protected typically offer the benefit of higher in the immediate term but there is the risk that the issuer will call or redeem the bonds if the market fall. Under those circumstances, investment alternatives will yield less than at the time of the original investment. Conversely, notes that are call protected may offer relatively lower rates in comparison with callable issues. Under the falling rate scenario, call protected issues cannot be redeemed before the stated maturity date and thereby shield the investor from interest rate risk, assuming the bonds are held until maturity. Payment flexibility Each week’s posting usually contains monthly, quarterly, and semiannual payment frequencies, allowing you to tailor your portfolio around your cash-flow needs. Survivor's option To help mitigate market risk during estate planning, a survivor s option may be available for some issues. In the event of death of the holder, the survivor s option may allow the holder's estate to return bonds to the issuer at par. Historically, many CorporateNotes had the Survivor's option feature. However, with the passage of time, it has become less and less frequent. Review the Attributes column on the New Issue Corporate Notes Search Results page to determine whether the survivor s option feature is available. What are the risks
Interest rate risk Prices are vulnerable to changes in rates; if rates rise, the market price of issued corporate notes will generally decline. Credit and default risk Investors should consider the possibility or risk that an issuer may on interest or principal payments. Redemption risk The issuer retains the right to limit the aggregate amount of notes that may be put back in any given year under the provisions of the survivor’s option. In the case of default, rights to put notes back to the issuer under the survivor’s option cease to exist. Additional limitations and restrictions may apply. Read each prospectus for details. Call risk Issuers can redeem callable bonds prior to maturity. This typically occurs when interest rates decline and the issuer has incentive to refinance their debt at lower prevailing levels of interest rates. When a bond is called, investors typically find that the reinvestment choices the market presents have lower yields for commensurate levels of risk. Investors should read a bond’s prospectus to understand a bond’s call risk. Adjustable rate Coupons If your Corporate Note has an adjustable rate coupon schedule, the interest rate of your Corporate Note may be higher or lower than prevailing market rates. There are three types of adjustable rate coupons: Floating rate, Fixed to Float rate, and Step-up rate. The interest rate of a Floating rate corporate note varies up or down in response to changes in a short-term borrowing rate known as the Secured Overnight Funding Rate, or SOFR. The interest rate for a Fixed to Float rate corporate note is initially offered at a set coupon rate until a pre-determined future date, after which the coupon adjusts in response to the benchmark SOFR. A step-up Corporate Note pays a below-market interest rate for an initial defined period (often one year). After the expiration of that initial period, the coupon rate generally increases, and the Corporate Note will pay this interest rate until the next step, at which time it changes again, and so on through the maturity date. Holders bear the risk that the adjustable coupon rate might be below future prevailing market interest rates. The initial rate on an adjustable Corporate Note is not the yield to maturity. You receive the yield to maturity (YTM) only if you hold the Corporate Note until maturity (i.e. it is not sold or called). Please review the adjustable rate coupon schedule and call information found in the coupon and attribute columns of the search results page or in the Statutory Prospectus. Liquidity risk A limited secondary market may exist for certain securities in the event you wish to liquidate prior to maturity. In these cases, investments could be subject to a gain or loss of principal. Next steps
Search our corporate notes new issue offerings. Get updates on new issue or secondary corporate bonds sent to your wireless device or Fidelity.com inbox.
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More types of new issue corporate notes are now available 1. Fidelity makes certain new issue products available without a separate transaction fee. Fidelity may receive compensation from issuers for participating in the offering as a selling group member and/or underwriter. 623706.6.1 Footer
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survivor s option
also known as a "death put," a feature of certain debt instruments allowing for the estate of a deceased investor to "put back" or redeem both principal and interest of that instrument without penalty; CDs or bonds that carry a survivor s option usually redeem for par value when the survivor s option is exercised; partial withdrawal of the owner’s interest is not permitted; the survivor’s option must be invoked by the estate prior to any account re-registrations or transfer; issuers may limit the permissible early withdrawal of CDs or bonds to the FDIC insurance limits (currently $250,000 for each insurable capacity), and/or may limit the amount being put back in a particular time period call protection
Provision of a bond that makes it non-callable or not subject to a scheduled call, even though other early redemption provisions may exist as specified in the prospectus or official statement. coupon
the interest rate a bond's issuer promises to pay to the bondholder until maturity, or other redemption event; generally expressed as an annual percentage of the bond's face value interest rate
the annual rate, expressed as a percentage of principal, payable for use of borrowed money yield
the percentage of return an investor receives based on the amount invested or on the current market value of holdings; it is expressed as an annual percentage rate; yield stated is the yield to worst — the yield if the worst possible bond repayment takes place, reflecting the lower of the yield to maturity or the yield to call based on the previous close interest
the amount paid by a borrower to a creditor, or bondholder, as compensation for the use of borrowed money default
occurs when a bond issuer fails to make either an interest payment or principal repayment on its bonds as they come due, or fails to meet some other provision of the bond indenture