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 ?
Speculative grade bonds, which performed very strongly in 2012, still yield around 6% on both sides of the Atlantic, which makes them still the most attractive fixed-income asset.
Ohio National also maintains a somewhat above average allocation to medium risk and speculative grade bonds in its investment portfolio, therefore assuming a higher level of credit risk as evidenced by its large amount of unrealized investment losses relative to the total adjusted capital.
Rating activity, while skewed toward downgrades, was also relatively more balanced across the pool of speculative grade bonds, with $17.