High-yield bond

High-yield bond,

Definition of High-yield bond:

  1. Alternative term for junk bond.

  2. High-yield bonds (also called junk bonds) are bonds that pay higher interest rates because they have lower credit ratings than investment-grade bonds. High-yield bonds are more likely to default, so they must pay a higher yield than investment-grade bonds to compensate investors.

  3. Issuers of high-yield debt tend to be startup companies or capital-intensive firms with high debt ratios. However, some high-yield bonds are fallen angels that lost their good credit ratings.

How to use High-yield bond in a sentence?

  1. High-yield bonds offer investors higher interest rates and potentially higher long-run returns than investment-grade bonds but are far riskier.
  2. In particular, junk bonds are more likely to default and display much higher price volatility.
  3. These bonds have credit ratings below BBB- from S&P, or below Baa3 from Moody's.
  4. High-yield bonds, or "junk" bonds, are corporate debt securities that pay higher interest rates because they have lower credit ratings than investment-grade bonds.

Meaning of High-yield bond & High-yield bond Definition