Junk Bonds
Investors in bonds, have a large selection of issues to choose from in the market. One of those options includes high yield debt, more commonly referred to as junk bonds.
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Junk bonds
Wall Street slang for bonds listed at below investment grade (below the top four ratings) by agencies that rate bonds.
Junk Bonds Non-investment grade bonds with a credit rating of BB or lower; also known as high-yield bonds.
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Junk Bonds
Definition: An unsafe bond that pays a high interest rate (sometimes as high as 15-20%!). If a junk bond defaults, you might not even get your initial investment back.
Junk Bonds
Corporate bonds that have bad credit ratings.
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Junk Bonds: High risk bonds with low credit ratings.
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Junk bonds: High-yield bonds that credit-rating agencies consider speculative. The bonds typically offer higher yields and carry higher risk than bonds with investment-grade ratings.
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Junk bonds are typically issued by companies which have a BB or lower rating from Moody’s and Standard & Poor’s. These are the companies which are run into financial trouble and their ratings are cut.
Junk bonds are bonds for companies with very low credit ratings. As a result, these bonds usually have a high yield - but there are also a lot of risks associated with them.
Junk bonds became ubiquitous in the 1980s by investment bankers, such as Michael Milken, as a financing mechanism in mergers and acquisitions.
Junk bonds are bonds issued by companies whose credit has been rated non-investment grade quality by the major bond rating agencies.
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JUNK BONDS
A bond with a speculative credit rating of BB or lower is a junk bond. Such bonds offer investors higher yields than bonds of financially sound companies.
In most cases, the junk bonds that are utilized to back a collateralized bond obligation will be corporate bonds.
Because of the large amount of debt relative to equity in the new corporation, the bonds are typically rated below investment grade, properly referred to as high-yield bonds or junk bonds.
A counterparty in a junk bond swap receives the total rate of return on a portfolio of junk bonds and pay LIBOR.
A bank loan swap might pay the total rate of return on a risky bank loan and receive LIBOR.
Junk bonds aren't for everybody or even most people, but they aren't all bad.
For example, if a risk-free 10-year Treasury note is currently yielding 5% while junk bonds with the same duration are averaging 7%, the spread between Treasuries and junk bonds is 2%.
Don't be fooled by the name - junk bonds may be for you if you know how to analyze them. Junk Bonds: Everything You Need to Know
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You can get everything from low-yield treasury bonds that are backed by the full-faith of the federal government to junk bonds, which are high-risk bonds issued by companies with credit problems.
In some cases, the term "junk bonds" is used to refer to all high-yield bonds-i.e., those that are rated below investment grade or are not rated. In other cases, the term refers to the lower tiers of high-yield bonds in credit quality.
Investment-grade Bonds backed by a Collection of junk bonds with different levels of risk, called tiers, that are determined by the quality of junk Bond involved. CBOs backed by highly risky junk bonds receive higher Interest rates than other CBOs.
The purchase of a company by a small group of investors financed largely by debt, often in the form of junk bonds.
High-yield bonds, popularly known as junk bonds, are lower than investment-grade securities. These bonds are considered to be ‘speculative' because the issuing company's ability to meet the debt obligations is less certain.
High-yield bonds may also be described as junk bonds.
INDIVIDUAL RETIREMENT ACCOUNT (IRA)
Individual retirement accounts (IRAs) provide tax incentives to encourage people who earn income to invest for retirement.
A junk bond is a high risk, non investment grade bond with a low credit rating. Junk bonds typically have a bond rating lower than BB. Junk bonds tend to offer a high yield to attract investors.
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“The values of insurance company holdings, from stocks to bonds to real estate (and probably including junk bonds as well), will be falling precipitously….
We may think that the Great Crash of 1929, junk bonds of the '80s, and overvalued high-tech stocks of the late '90s are peculiarly 20th century aberrations, but Mackay's classic shows that the madness and confusion of crowds knows no limits, ...
Other types of bonds that can help diversify a portfolio include corporate bonds, junk bonds, municipal bonds and foreign government debt instruments.
Here are some of the caveats of bond investing: ...
A bank loan to a highly leveraged company. HLTs can be thought of as similar to junk bonds as they both face default risk, but HLTs are more secure and have stronger debt covenants due to their structure.
Junk bond Debt issued by a company whose credit rating is below investment grade (below BBB by Standard and Poor's or Baa by Moody's). Junk bonds carry a much greater risk of default than investment-grade bonds, ...
A Junk bond is a bond with a speculative credit of BB (Standard and Poor's) or Ba (Moody's) or lower due to it's high default risk. Junk bonds typically offer higher yields than the safer bonds of more financially sound companies or government ...
If a bond's ratings fall below those minimums, they are generally referred to as junk bonds or junk munis. A municipal bond may not have a rating (designated as NR).
Also called high-yield bond or non-investment-grade bond, it is a bond rated below investment grade at purchase time. Although with a higher risk of default, junk bonds pay higher yields than bonds of better quality, ...
Behavioral finance theorists point to the market phenomenon of hot stocks and bubbles, from the Dutch tulip bulb mania that caused a market crash in the 17th century to the more recent examples of junk bonds in the 1980s and Internet stocks in the ...
Junk bonds carry a much greater risk of default than investment-grade bonds, but also offer greater potential returns. Also known as high-yield bonds Justified price ...
Because investors generally are averse to risk, high-risk investment options (junk bonds, for example) must offer higher potential returns than low-risk options (index funds or CD accounts, for example). (See also Risk.) ...
High current income mutual fund
A mutual fund whose primary goal is to produce a high level of income by making higher-risk investments in instruments such as junk bonds.
the Dow Jones Industrial Average dropped a record 508 points, or nearly 23%. Disarray in the financial markets resulted from a combination of trade deficits, budget deficits, and potential government regulation of mergers and issuance of junk bonds.
Debt risk is judged by rating agencies. Bonds with ratings from BBB and higher are called ‘Investment grade’, bonds with lower ratings ‘High Yield bonds’ or ‘Junk bonds’.
Your choice in bonds range from the highest credit quality, usually a U.S. Treasury security, which is backed by the U.S. Government, to bonds that are below investment grade and considered speculative, or "junk bonds".
bond issuers" financial strength and cash flow with respect to projected interest payments and principal repayment. Ratings range from AAA or Aaa (highest) to D (in default). Bonds rated below B are not investment grade and are termed , "junk bonds" ...
of holding more bonds would be attractive to the investor despite their lower potential for growth. You should keep in mind that certain categories of bonds offer high returns similar to stocks. But these bonds, known as high-yield or junk bonds, ...
through bubbles in the other major asset classes, this potential energy created by the Fed was easily converted to kinetic energy with the guiding hands of the unscrupulous. As an aside, the bubble they are about to create next will be in junk bonds.
 See also: Bonds, Junk bond, Investment, Market, Risk
  
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