high-yield bond

(redirected from Low-Grade Bond)
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Noun1.high-yield bond - a (speculative) bond with a credit rating of BB or lower; issued for leveraged buyouts and other takeovers by companies with questionable credit
bond certificate, bond - a certificate of debt (usually interest-bearing or discounted) that is issued by a government or corporation in order to raise money; the issuer is required to pay a fixed sum annually until maturity and then a fixed sum to repay the principal
References in periodicals archive ?
Despite the difference in methodology between the Cornell and Green study and the other two studies, all three studies conclude that low-grade bond returns and resulting holding-period risk premiums are consistent with their systematic risk and that low-grade bonds are fairly priced relative to high-grade debt.
Finally, stochastic dominance model is applied to show that small stock returns dominant low-grade bond returns.
Many fund managers assert that low-grade bond returns are more sensitive to changes in economic activity than to changes in interest rates.
1994, "Unravelling the Low-Grade Bond Risk/Reward Puzzle," Financial Analysts Journal (July/August), 32-42.
New merger proposals dropped off noticeably during the first part of 1990 as a consequence of the virtual unavailability of funds for new financing in the low-grade bond market; the more cautious attitude of commercial banks, both domestic and foreign; and the weakening in the market for asset sales.
Cornell and Green (1991) rely on the returns for low-grade bond funds to estimate the risks and returns for these bonds.
Shane (1994) writes, "A low-grade bond can be viewed as a hybrid security consisting of a government bond and a claim on the issuing firm's equity.
At year-end 1998, medium- to low-grade bond and unaffiliated stocks represented 154% of total adjusted capital.
Salter suggested a mix of 2% low-grade bonds, 30% large-cap, 24% mid-cap, 20% small-cap, and 24% international stocks, the latter preferably within a managed fund.
Over the relevant time period, the Fund's net asset value (NAV) declined by 45 percent as a result of, among other things, the Fund's overexposure to low-grade bonds, unrated bonds, high-risk securities and the California real estate market.
They conclude that low-grade bonds display characteristics of both small stocks and high-grade bonds.
The company's ratio of risk assets (the sum of low-grade bonds, mortgages, real estate, and equities) to total adjusted capital of 30.

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