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Junk bonds may not trade as frequently as investment-grade bonds, meaning you might have a harder time selling your bonds immediately or without taking a more substantial discount on the market price.
Investment-grade bonds with a lower risk of default are rated BBB up to AAA on the Standard & Poor’s credit rating scale and other models. Junk bonds, or high-yield bonds, are rated below BBB ...
High-yield bonds: High-yield bonds are also referred to as “junk bonds,” and they are viewed as more risky, though not necessarily very high risk, depending on exactly the grade and financial ...
In finance, a high-yield bond (non-investment-grade bond, speculative-grade bond, or junk bond) is a bond that is rated below investment grade by credit rating agencies. These bonds have a higher risk of default or other adverse credit events but offer higher yields than investment-grade bonds in order to compensate for the increased risk.
Bonds rated AAA, AA, A, and BBB are High Grade, while bonds rated BB and below are High Yield. This is a significant distinction as High Grade and High Yield bonds are traded by different trading desks and held by different investors. [6] For example, many pension funds and insurance companies are prohibited from holding more than a token ...
For Fitch, a bond is considered investment grade if its credit rating is BBB− or higher. Bonds rated BB+ and below are considered to be speculative grade, sometimes also referred to as "junk" bonds. [103] Fitch Ratings typically does not assign outlooks to sovereign ratings below B− (CCC and lower) or modifiers.
The interest rate available will depend on the financial strength of the company doing the borrowing. Corporate bonds are often divided into two categories: Investment-grade bonds
The overlap occurs of the mid-term debt of the best rated corporations with the short-term debt of the nearly perfectly, but not perfectly rated corporations. In this arena, the debts are called investment grade by the rating agencies. The lower the credit rating, the higher the yield and thus the expected return.