High-yield bond

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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 ?
And while the risks are still very real, high-yield bond funds continue to deliver hot returns.
The only time the spread was lower: June 2007, which was an exceptionally bad time to buy high-yield bonds.
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The case for an equity component in high-yield bonds is buttressed by theory.
If the recovery picks up steam, you may suffer a little principal erosion in your government and municipal bond portfolio as short-term rates rise, but your high-yield bonds will benefit.
The recapitalization plan that the company has chosen enables the public shareholders to receive $14 in cash, a high-yield bond worth $6, and one new share (the "stub") in the recapitalized entity valued at $14.
Looking a few years ahead, he expects defaults to "be much higher" than they've been historically for high-yield bonds and other fixed income assets that pay higher interest rates than their peers.
The yield on high-yield bonds remains attractive, at approximately 8.
The team specializes in the analysis and management of senior floating rate loans, high-yield bonds and the use of leverage to manage portfolios.
At inception, the investment manager targeted a portfolio of 50% to 70% high-yield bonds, 15% to 25% bank loans and the balance in mezzanine and special situations investments.