Junk bonds financial definition of Junk bonds. Junk bonds finance term by the Free Online Dictionary.

Junk bond

A bond with a speculative credit rating of BB (S&P) or Ba (Moody's) or lower. Junk or high-yield bonds offer investors higher yields than bonds of financially sound companies. Two agencies, Standard & Poors and Moody's Investor Services, provide the rating systems for companies' credit.

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.

junk bond

A high-risk, high-yield debt security that, if rated at all, is graded less than BBB by Standard & Poor's or BBB3 by Moody's. These securities are most appropriate for risk-oriented investors. Also called high-yield bond.

Junk bond. Junk bonds carry a higher-than-average risk of default, which means that the bond issuer may not be able to meet interest payments or repay the loan when it matures.

Except for bonds that are already in default, junk bonds have the lowest ratings, usually Caa or CCC, assigned by rating services such as Moody's Investors Service and Standard & Poor's (S&P).

Issuers offset the higher risk of default on junk bonds by offering substantially higher interest rates than are being paid on investment-grade bonds. That's why junk bonds are also known, more positively, as high-yield bonds.

Junk Bond

What Does Junk Bond Mean?

A bond rated BB or lower because of its high risk of default. Also known as a high-yield bond or speculative bond. This type of bond is considered less than investment grade.

Investopedia explains Junk Bond

These bonds usually are purchased for speculative purposes. Junk bonds typically offer interest rates three to four percentage points higher than those on safer government issues. The higher interest rate is meant to compensate investors for the higher risks associated with the issuer.

Related Terms:
• Bond Rating
• Credit Rating
• Investment Grade
• Risk
• Yield

Mentioned in	?		References in periodicals archive	?		Financial browser	?		Full browser	?
BA Baa Baa3 BB BBB- Bond Rating Bond Strategy Bono basura Bono de calidad inferior CBO Collateralized Bond Obligation Conditional Call Option Conditional Call Options Corporate Bond Fund Cram-Down Deal Deep Discount Bond Deep-Discount Bond Default Premium Fallen Angel	The feeling then was that a lot of companies might have trouble meeting their obligations," says Sweeney Investors acted too swiftly on concerns, and soon junk bonds were priced too cheaply in the eyes of market experts. Find jewels in junk: high-yield bond funds are one way to beat the ... by Anderson, James A. / Black Enterprise However, junk bonds do vary in "junkiness," volatility and yields. If you hate risk, scrap junk bonds by Leckey, Andrew / FOCUS: Journal for Respiratory Care & Sleep Medicine Junk bonds, by paying investors a higher rate of return in recompense for assuming a higher level of risk, provide an effective means of bypassing traditional financing channels. The Mike and Rudy show heads for Japan. (Flip Side) by Queenan, Joe / Chief Executive (U.S.)	judge-made law judgment judgment creditor judgment debtor judgment in rem judgment lien judgment-proof judicial foreclosure judicial landmark Juego de suma cero Julliard v. Greenman Jumbo CD Jumbo Certificate of Deposit Jumbo Loan jumbo mortgage Jump ball Junior Capital Pool Junior Debt Junior Issue junior lien or mortgage Junior Mortgage Junior Refunding Junior Security Junior Stock Junk Bond Junk bonds junk fees Junk Financing Junk Muni-Bond Fund Junsui Kitai Kasetsu Junta arbitral Junta de directores Jurat Jurgen Stark jurisdiction Jurisdictional Arbitrage Jurisprudencia Juristic Act Juro Juro composto Juro pos fixado Juro prefixado Juros a pagar Jury of Executive Opinion just compensation Just In Case Just In Time just title Just-in-Time Inventory Systems Justified Price Juuzoku Hensuu	JUnit JUNITY Junius Junius Junius Annaeus Gallio Junius Brutus Junius Brutus Junius Columella Junius Columella Junius Columella Junius Richard Jayawardene Junius Richard Jayewardene Junius, Franciscus Junji Kinoshita junk junk junk junk junk junk junk art Junk Bay Chinese Permanent Cemetery Junk Beer Kidnap Band junk bond junk bond junk bond junk bond Junk Bond Fund Junk Bond Funds Junk Bond Observatory Junk bonds Junk bottle Junk box Junk dealer Junk debt buyer junk deoxyribonucleic acid junk DNA junk DNA junk e-mail junk e-mail junk e-mail junk e-mail Junk E-Mail Reporting Junk E-Mail Reporting Program Junk email Junk fax Junk Fax Prevention Act Junk Fax Stock Tracker Junk faxes junk fees junk filter junk financing junk folder junk food junk food junk food Junk Food Diet Junk gun Junk gun Junk guns Junk guns

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BA
Baa
Baa3
BB
BBB-
Bond Rating
Bond Strategy
Bono basura
Bono de calidad inferior
CBO
Collateralized Bond Obligation
Conditional Call Option
Conditional Call Options
Corporate Bond Fund
Cram-Down Deal
Deep Discount Bond
Deep-Discount Bond
Default Premium
Fallen Angel

The feeling then was that a lot of companies might have trouble meeting their obligations," says Sweeney Investors acted too swiftly on concerns, and soon junk bonds were priced too cheaply in the eyes of market experts.

Find jewels in junk: high-yield bond funds are one way to beat the ... by Anderson, James A. / Black Enterprise

However, junk bonds do vary in "junkiness," volatility and yields.

If you hate risk, scrap junk bonds by Leckey, Andrew / FOCUS: Journal for Respiratory Care & Sleep Medicine

Junk bonds, by paying investors a higher rate of return in recompense for assuming a higher level of risk, provide an effective means of bypassing traditional financing channels.

The Mike and Rudy show heads for Japan. (Flip Side) by Queenan, Joe / Chief Executive (U.S.)

Junk Bond (redirected from Junk bonds)

Junk Bond
(redirected from Junk bonds)