High risk securities that have received low ratings and as such, produce high yields so long as they do not go into default. A bond claimed to have a low investment quality and credit worthiness, usually with a rating of "BB" or less.
A general term for bonds issued by corporations during a leveraged buyout (LBO) for the purpose of raising capital to buy a controlling position of the company's shares. The difference between junk bonds and other corporate bonds are the size of the bond issue and the purpose for which the bonds are issued. They earned the nebulous title "junk" because so many of the bond issues depreciated dramatically in market value after the issue because the market value of the underlying assets securing them depreciated. There was no other collateral.
Corporate bonds of sub-investment grade (credit rating of BB or lower), also known as high yield bonds. Usually issued by companies without long track records of sales or earnings, or by those with questionable credit standing.
The two major credit rating services rate bonds as to their credit worthiness. Bonds that are rated at or above "Baa" by Moody, or "BBB" by S&P are said to be investment grade bonds. Bonds rated lower than these ratings are said to be high yield ( junk) bonds.
bond with a credit rating of BB (S&P) or Ba (Moody's) or lower. Junk or high-yield bonds typically offer investors higher yields than bonds of more financially sound companies. Two agencies, Standard & Poor's and Moody's Investors Service, provide the rating systems for companies' credit. There are no glossary words under this letter.
The two major rating agencies, Moody's Investors Service and Standard & Poor's, evaluate the financial strength of bond issuers and assign safety ratings to them. Bonds rated at or above "Baa" by Moody's Investors Service, or "BBB" by Standard & Poor's are referred to as investment grade bonds. Bonds that are rated lower are commonly referred to as junk bonds.
High-risk bonds issued by companies with credit ratings below investment grade (a ranking given by the credit rating agencies). Such bonds are also called high-yield bonds as they offer investors higher yields than bonds of financially sound companies. They are usually issued to finance leverage buy-out operations. Français: Obligations à haut risque Español: Bono basura
DEBT SECURITIES issued by companies with higher than normal credit risk. Considered "non-investment grade" bonds, these SECURITIES ordinarily yield a higher rate of interest to compensate for the additional risk.
Corporate bonds with credit ratings of BB or less. They pay a higher yield than investment grade bonds because issuers have a higher perceived risk of default. Such bonds involve market risk that could force investors, including insurers, to sell the bonds when their value is low. Most states place limits on insurers' investments in these bonds. In general, because property/casualty insurers can be called upon to provide huge sums of money immediately after a disaster, their investments must be liquid. Less than 2 percent are in real estate and a similarly small percentage are in junk bonds.
Issued by corporations,junk bonds are of less than investment-grade ratings (i.e.,below a Baa rating by Moody's or BBB by Standard and Poor's). Because the credit risk in owning them is greater than higher-quality bonds, their yields are often higher. Also known as high-yield bonds.