High-yield bond


Also found in: Dictionary, Thesaurus, Medical, Legal, Encyclopedia, Wikipedia.
Related to High-yield bond: junk bond

High-yield bond

High-Yield Bond

A bond with a low rating. Bonds rated less than Baa3 by Moody's or BBB- by S&P or Fitch are considered high-yield bonds. They have higher yields because they have a higher risk of default on the part of the issuer. High-yield bonds are considered sufficiently high-risk that the law does not allow banks to invest in them. They are also called low-grade bonds, and, informally, junk bonds.

high-yield bond

See junk bond.

High-yield bond.

High-yield bonds are bonds whose ratings from independent rating services are below investment grade.

As a result, to attract investors, issuers of high-yield bonds must pay a higher rate of interest than the rates that issuers of higher-rated bonds with the same maturity are paying. The higher rate translates to more income, which is the higher yield.

High-yield bonds may also be described, somewhat more graphically, as junk bonds.

References in periodicals archive ?
The only time the spread was lower: June 2007, which was an exceptionally bad time to buy high-yield bonds.
I conclude that Christensen and Faria's findings, however useful in their own right, do not contradict the existence of an equity component in nonconvertible high-yield bonds.
High-yield bonds -- These typically comprise 20 to 40 percent of total funding and can command a wide range of interest rates but are normally 400 to 500 basis points over prime.
BOTTOM 5 HIGH-YIELD BOND FUNDS 6-Month 1-Year Fund Name Total Return(*) Total Return Principal High-Yield B 0.
What they fail to recognize is that high-yield bond investing is more analogous to total return stock investing than to fixed income investing.
Portfolio Manager Michael Buchanan, CFA, who focused on high-yield bond management for BlackRock, recently left the firm.
Fallen angels-which are issuers that fall from investment grade ('BBB-' and above) to speculative grade ('BB+' and below)-accounted for 42% of total volume generated in the high-yield bond market.
As in prior quarters, however, defaults, distressed recoveries and downgrades in the high-yield bond market continued to distress CDO transactions collateralized by high-yield bonds.
The US platform also offers Deutsche X-trackers High Yield Corporate Bond-Interest Rate Hedged ETF (Bats: HYIH), which provides exposure to high-yield bonds while potentially reducing the interest rate risk in an investment portfolio.
According to several asset managers/advisers, insurers have turned to high-yield bonds, bank loans with floating rates, mezzanine debt, mortgage trading securities and global infrastructure securities.
High-yield bonds, better known as junk bonds because of their low credit rating and low sensitivity to interest rates, were added, with a smattering of mutual funds that invest in bonds overseas.
Figures indicate that the percentage of high-yield bonds trading at distressed levels has dropped in the US.