High-yield bond

(redirected from High-yield bonds)
Also found in: Dictionary, Thesaurus, Wikipedia.
Related to High-yield bonds: Junk bonds

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 ?
This lower correlation demonstrates that municipal high-yield bonds have not moved in the same direction or to the same degree as their corporate counterparts.
While the war in Iraq and the political tensions that preceded it have hurt stocks lately, their effect on the high-yield bond market has been virtually unnoticeable," continues Friedman.
As for the remaining six months, Standard & Poor's sees some opportunity in high-yield bonds but not to the extent of what was seen in the first half of the year.
The yield on high-yield bonds remains attractive, at approximately 8.
Last year, the combined, weighted, after-tax yield of this portfolio of municipals, government, and high-yield bonds would have been 6.
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.
High-yield bonds are not suitable for all investors and the risks of these bonds should be weighed against the potential rewards.
1991, "Hedging the Equity Risk of High-Yield Bonds," Financial Analysts Journal (September/October), 41-50.
This possible elevation in interest rates would affect other bonds (government or other corporate debt) more than it would affect high-yield bonds -- an event that would lead investors to look more closely at high-yield bonds.
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.
Tradeweb, a leader in building and operating fixed income and derivatives markets, today announced that it is enhancing its rapidly-growing European credit platform with the addition of European high-yield bonds.
Figures indicate that the percentage of high-yield bonds trading at distressed levels has dropped in the US.