Can someone direct me to a source that explains what determines corporate bond prices?

Answer 1

There is no source, per se. Corporate bond prices are determined by various factors. The credit rating, date of maturity, coupon (interest the bond pays), call features, issuer, current interest rate & inflation environment, and duration all play a role in determining a bond's yield. Yield is really how bonds are priced & traded.

For example, a new issue AAA corporate bond that matures in 10 years might be issued at par, 100, with a 5% coupon and therefore yields 5%. If current interest rates go down, then this same bond is worth more (because it pays more than newer bonds). So if it's price goes up to 102 (a $20 premium), it's yield might go down to 4% (you need a bond calculator to figure this out, that's just a guess). On the other hand, if interest rates stay the same, but the credit rating of the issuer is lowered from AAA (the highest) to CCC (junk) the yield will go way up (because the price goes down) because the risk of default is high.

Check the link below.

Ultimately, the price a bidder is willing to pay and an offerer is willing to sell will determine the price of any security.

Answer 2

http://finance.yahoo.com/bonds/types_of_bonds/article/100987/Corporate_Bonds_Explained