Noninvestment grade bonds. Also called Junk Bonds. See also: Investment Grade.
High-yield bonds, popularly known as junk bonds, are lower than investment-grade securities. These bonds are considered to be â€˜speculativeâ€(tm) because the issuing companyâ€(tm)s ability to meet the debt obligations is less certain.
High-yield bonds are issued by organizations that do not qualify for "investment-grade" ratings by one of the leading credit rating agencies. These issuers must pay a higher interest rate to attract investors to buy their bonds and to compensate them for the risks associated with investing in organizations of lower credit quality.