High-yield bond

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Related to High yield bonds: Junk bonds, High Yield Bond Funds

High-yield bond

Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

high-yield bond

See junk bond.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Unfortunately, this doesn't hold true for high yield bonds and, for the most part, price movements in this space tend to be more positively correlated with stocks, not higher-quality fixed income assets like Treasury bonds.
With the stock market setting new highs and the positive correlation that high yield bonds have to the equity market, it may not be time to hit the panic button yet, in terms of the level of high yield debt in one's investment portfolio, however, keep an eye on default rates, pay attention to unemployment, inflation and interest rates in terms of what they're telling us about our relative position in this longer term expansion, and beware of an inverted yield curve where Fed action and other market forces push short term interest rates above long term interest rates; a situation like that has often preceded past recessions.
High yield bonds carry some interest rate risk, but with the two-year US Treasury yield at 2.5 per cent and the five-year at 2.8 per cent, much of the coming cycle may be already priced in.
High yield bond funds, by contrast, suffered substantial outflows during 2017 and in all but one month year-to-date.
We have long advocated diversifying into European high yield bonds, and indeed loans.
Global Banking News-February 3, 2016--Generali to overhaul Euro high yield bond fund
But the credit spreads, the difference between the yield on a high yield bond and a Treasury security, are actually closer to their historic average.