Junk bond

What is junk bond?
In some cases, the term “junk bonds” refers to all of them High yield bonds, ie those rated below investment grade or not rated. In other cases, the term refers to the lower tiers of high yield credit quality bonds. Many of today's high yield bonds, especially those rated BA by Moody's or BB by other rating agencies, are not considered “junk”.
A junk bond (or high-yield bond) is one with an S&P credit rating of BB or lower and has a higher risk of interest or capital default than bonds with a higher rating grade. Junk bonds are issued as part of leveraged buyouts and other takeovers by companies that do not have record sales and earnings, or those with questionable credit ratings.

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