A junk bond (high-yield bond, or non-investment-grade bond) is a bond that is rated below investment grade. These bonds have a higher risk of default or adverse credit events, but they offer higher yields than investment-grade bonds.
Questions tagged [junk-bonds]
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What is a "Junk Bond"?
I was reading Barbarians at the Gate and I read that junk bonds were required to do large leveraged buyouts. What is a junk bond and how does it differ from a regular bond? Why is there higher risk/chance of default?
Zameer Manji
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What is the risk to a high-yield corporate bond fund versus an investment-grade corporate bond fund?
The yield for HYG, a high-yield (i.e. junk) corporate bond ETF, is currently 5.72% versus 3.56% for LQD, an investment-grade corporate bond ETF. Of course, higher yield generally means higher risk. But don't these yields already take into account…
Craig W
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Bonds near maturity better than 3-month CDs? Need help explaining Bond stats
I have a ton of money in a checking account earning 0% interest. I thought about buying 3-month CDs with 2.25% interest (or 0.56% per 3 months), something short term so my money isn't locked up for long in case I need it.
However, I found high-yield…
peppy
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Which spot Treasury bond is used to calculate this high-yield spread?
The link below shows the BofA Merrill Lynch US High Yield Option-Adjusted Spread. I am trying to have a better understanding of high-yield bonds before I invest in…
curious
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Are junk bonds advisable to be inside a bond portfolio that has the objective of generating stable income for a retiree?
Suppose a person has retired. He would like to construct a bond portfolio that generates stable income for his remaining days. Is it advisable to include junk bonds in the bond portfolio for that extra yield? Are there rules of thumb in the…
curious
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Dividend amounts -- not just yield -- from my bond fund decreased over the past 18 months
Why?
I'm not questioning the yield percentage, which I know has dropped; it's the dollar amounts that puzzle me. I'd have expected the price of VWEAX to have risen (it's increased 1.71% in that time period), and the dividend amounts to have stayed…
RonJohn
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Where can I find information on corporate bonds (especially those rated as "junk") ?
I've been searching a number of financial sites and I can't seem to find a way to browse for companies that are selling bonds, and what rates/durations those bonds are at. How does one go about finding this kind of information? Ideally I'd like an…
corsiKa
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Impact of rising interest rates on default risk of existing junk bonds?
When interest rates rise, we all know that Math shows that the value of a bond will drop, but that's not my question.
Intuition says that there's an indirect risk, in that rising rates might hurt their business, thus increasing the likelihood of…
RonJohn
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Why did US junk bond funds fall from mid 2014 thru early 2016?
The Federal Funds rate was 0% the whole time, and the Prime rate stayed at 3.75%, so it seems that investor fear was the cause.
What caused them to be afraid?
Here shows how two big junk bond ETFs fell in that time frame:
RonJohn
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Can companies deliberately cause their bonds to be downgraded to junk status in order to reduce repayment?
Suppose a company decides to issue bonds at $1000 par value with $50 annual coupon (5% yield). Suppose these bonds were considered "investment grade" when issued. Suppose the company subsequently decides to engage in risky and questionable…
Flux
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How's buying corporate junk bonds buying equities by proxy?
Is this r/wallstreetbets comment correct? If so, please expound?
Buying corporate junk bonds is by proxy buying equities. Before someone goes on a tangent, this is cause and effect.
user10763