High-yield bond

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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 rules indicate that low/negative retained earnings, low/negative total assets or high levels of debt finance are symptomatic of a firm that has a junk rating.
Greece and Cyprus government debt securities have a junk rating by major ratings agencies.
Moodys Investors Service cut Croatias to a junk rating of "Ba1' from 'Baa3', blaming the move on a stalled recovery, lack of budget discipline and the economy's vulnerability to external shocks.
dollar and the yen Wednesday in Tokyo as Moody's Investors Service affirmed its rating on Spain's government debt, allaying fears that the eurozone country could be cut to a junk rating.
Any rating changes stemming from the new ceiling, which is Moody's fourth-lowest junk rating, will be announced in the next week, according to yesterday's statement.
In a further blow to the already ailing bank, Standard & Poor's downgraded Bankia to junk rating.
The company is rated Ba2 by Moody's Investors Service, two steps below investment grade, and BB- by Standard & Poor's, the third- highest junk rating.
Soon after, in November, Standard & Poor's Ratings Services downgraded its corporate credit rating to CCC, a junk rating that is just one notch above default.
S&P cut the long-term corporate credit ratings for GM and its GMAC finance arm by two notches to 'BB,' the second-highest junk rating.
Standard & Poors reduced the rating of Hollinger's credit to CCC+ status in March, which is the equivalent to a junk rating.
Among other eurozone countries, Portugal is rated junk by all three rating agencies, Ireland has one junk rating from Moody's, and Greece is either rated junk or in default by all three.
The company is rated Baa3 at Moody's, the lowest investment grade, while S&P rates it BB, the second-highest junk rating.