These are debt obligations issued by a corporation (as opposed to raising capital through stocks). The debt is repaid by the corporation to those who purchase the bonds over a specified period of time. Interest is paid at regular intervals, and both the interest and principal is paid to the bond holders before dividends are paid to stockholders. "Investment grade" bonds are high quality (meaning that they are likely to be repaid) and "junk bonds" are lower quality
(meaning there is a risk that they may not be repaid). Bonds that have a lower rating (meaning a higher risk) usually must pay a higher interest rate to lenders (offer a better return) than bonds that have a higher rating.