The term "baby bonds" refers to publicly traded debt instruments, that investors can buy and sell on the
major stock exchanges such as the NYSE and the Nasdaq. Although issued with a specific "par value" (typically $25), these
bonds may trade higher or lower following issuance, all depending on company developments and market conditions. Maturity
date differs bond by bond, and coupon payments
while typically quarterly, may also differ bond by bond. Credit rating and seniority in the capital structure also differ,
but the typical baby bond is junior to some other debt in the capital structure such as credit facilities with a bank. The
typical baby bond can also be "called" by the company at par, at some future date, so investors should take that into
consideration before paying a premium to par value. As a rule of thumb generalization, lower yielding baby bonds are viewed
by the market as carrying less risk, while higher yielding bonds are viewed as carrying more risk, but special situations and
liquidity-driven trading are also important to watch for, when considering investing in baby bonds. This list is to be
considered a starting point for further research.
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