Essay About Low-Grade Bonds And Credit Rating Of The Bond

Business Finance – Junk Bonds
PART33.6 Junk BondsJunk bond are the bonds that pay high yield with high default risk and are typically rated BB or lower by Moody’s/Standard & Poor’s. Low-grade bonds issued by company with a low-priority claim in bankruptcy, or with the risk of unable to meet their debt obligations. As most investors do not invest in these low-grade bonds, they are known as junk bonds. Junk bonds still keep some values due to it pays high yield. The lower the credit rating of the bond, the higher the return investors will get after issuer breached the contract. Morningstar, 2015, What Are Junk Bonds? Retrieved April 19 , 2015.