A high-yield corporate bond is a type of corporate bond that offers a higher rate of interest because of its higher risk of default. When companies with a greater estimated default risk issue bonds, they may be unable to obtain an investment-grade bond credit rating. As a result, they typically issue bonds with higher interest rates in order to entice investors and compensate them for this higher risk.
High-yield bond issuers may be companies characterized as highly leveraged or those experiencing financial difficulties. Smaller or emerging companies may also have to issue high-yield bonds to offset unproven operating histories or because their financial plans may be considered speculative or risky.
For additional information, please visit the following links.
Investor Bulletin: What are Corporate Bonds
Investor Bulletin: What are High-yield Corporate Bonds
Investor Bulletin: Interest Rate Risk
MSRB Investor Guide 2012
Bond Funds and Income Funds
Callable or Redeemable Bonds
Financial Industry Regulatory Authority (FINRA)
Information on CUSIP numbers
Late Payment of Interest on Bonds
Municipal Securities Rulemaking Board (MSRB)
MSRB Electronic Municipal Market Access (EMMA)
The Securities Industry and Financial Markets Association (SIFMA)