Home Personal Finance What are high-yield bonds?, Invest News & Top Stories

What are high-yield bonds?, Invest News & Top Stories

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A bond is a financial instrument that governments, companies and others use to borrow money. Investors who buy a bond issued by a company or government agree to be repaid at fixed intervals by a specific date.

A rating agency grades a bond based on the credit-worthiness of the issuer so investors can decide what level of risk they are comfortable with. High-yield bonds typically pay a higher coupon for investors who are willing to hold bonds with a lower credit rating than investment-grade bonds. Generally, the rating of a high-yield bond would be “BB+” or lower by S&P Global Ratings or Fitch Rating, and “Ba1” or lower by Moody’s.

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