Definitions for junk bond
This page provides all possible meanings and translations of the word junk bond
Random House Webster's College Dictionary
a corporate bond with a low rating and a high yield, often involving high risk.
Origin of junk bond:
junk bond, high-yield bond(noun)
a (speculative) bond with a credit rating of BB or lower; issued for leveraged buyouts and other takeovers by companies with questionable credit
A bond (an instrument of debt) which is considered below "investment grade" due to a significant risk of default by the issuer. The interest rate is higher in order to compensate holders for that risk.
In finance, a high-yield bond is a bond that is rated below investment grade. These bonds have a higher risk of default or other adverse credit events, but typically pay higher yields than better quality bonds in order to make them attractive to investors. Sometimes the company can provide new bonds as a part of yield which can only be redeemed after its expiry or maturity.
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