High-Yield Bond

A high-yield bond is a bond rated below investment grade and generally viewed as carrying a higher risk of default than an investment-grade bond.

A simple example

A lower-rated corporate bond may offer a larger yield spread over Treasury securities than a higher-rated bond.

Why this matters to income investors

The higher yield is compensation for additional credit and market risk, not extra income without extra uncertainty.

How to use high-yield bond in your research

Review the issuer, rating, leverage, maturity, covenants, recovery prospects, call terms, and yield to worst.

This material is general education and information, not individualized investment, tax, or legal advice.