Once the underwriting firm purchases the bonds, they are usually sold at
face value
in the
primary market.
After the initial sale, the bonds may be traded on the
secondary market,
which means they’re available for anyone to buy or sell, and the price will change depending on market demand, current interest rates, and the perceived financial risk of the company.
Rating bonds
That perceived risk can change, and if a
rating service
downgrades its rating of a particular company, existing bonds drop in value on the secondary market. That doesn’t directly hurt the company financially, only the bondholder, but it’s usually the result of financial problems at the company, and can further hurt its reputation. And if the company wants to issue new bonds, it will have to offer a higher interest rate to make it worth the risk to investors. That means raising future capital will be more expensive.
Professor Samuel L. Hayes,
Harvard Business
School
Professor 
