High-yield bond

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Related to High-yield debt: 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 ?
As a result, high-yield debt is now an option for companies with widely diverse investment strategies.
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Auditors' procedures for reviewing the high-yield debt security valuations to be reported in financial statements.
93-1, Financial Accounting and Reporting for High-Yield Debt Securities by Investment Companies, provides guidance on financial reporting by investment companies for high-yield debt securities that are held as investments.
Archimedes III was established to issue approximately $1 billion in debt and equity securities and invest the proceeds in a portfolio of predominantly high-yield bank loans and high-yield debt securities.
Nicholas-Applegate Convertible & Income Fund II is a closed-end management investment company that invests principally in convertible securities and high-yield debts.