High-yield bond

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Related to Non-Investment Grade Debt: junk bond, bond rating, High Grade 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 what about non-investment grade debt (junk bonds)?
The board of directors of closed-end bond fund managed by UBS Global Asset Management (Americas) Inc, Fort Dearborn Income Securities Inc (NYSE:FDI) approved on Monday an investment of up to 15% of its net assets in non-investment grade debt, with effect from or about 1 January 2011.
Non-investment grade debt issues are considered speculative with respect to the issuer's ability to pay interest and repay principal which may result in a reduction of the Fund's NAV.

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