High Yield

High Yield bonds (or high-yield bonds) are bond issues that offer a high yield in exchange for a high level of risk.

The issuers concerned are often companies in difficulty or that have a high level of debt associated with a low amount of equity. This gives High Yield bonds a highly speculative character.

The interest rate on these bonds can reach 7% to 8% and sometimes even higher. They were formerly called junk bonds.

A bond is called High Yield when the issuer's Standard & Poor’s rating is below BBB-. If the issuer's rating rises above BBB-, its issues become "investment grade."