Fixed Income
High-Yield Bond
Definition
What is High-Yield Bond?
A bond rated below investment gradeA credit-rating category generally associated with lower default risk than speculative-grade debt. and offering higher yield to compensate for greater credit riskThe possibility that a borrower or issuer will fail to make promised payments or suffer a downgrade..
Example in practice
How This Looks in Practice
A leveraged company issues high-yield bonds at 18%.
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Related Terms
Fixed Income
Bond
A debt security through which an investor lends money to an issuer in return for promised payments.
Fixed IncomeIssuer
The government, company, or organisation that creates and sells a security.
Fixed IncomeFace Value
The principal amount stated on a bond and usually repaid at maturity.
Money MarketsTreasury Bill
A short-term government debt instrument usually issued at a discount and repaid at face value.