high-yield 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 ?
For example, low-grade bonds are generally considered less liquid than investment-grade bonds; as such, the yields observed in the market for low-grade bonds will generally reflect a higher illiquidity premium than investment-grade bonds.
High-grade bonds accounted for 58% of the sample and low-grade bonds for 27%.
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.
Studies using actuarial approaches, such as Fons (1987) and Altman (1989, 1990, 1991, 1992, 1993), Long (1991), and Mood/s Special Report (1993), focus on the yield to maturity of low-grade bonds and compare implied default rates with actual default losses.
Researchers have found systematic differences among returns for different months of the year in low-grade bonds. No fully satisfactory explanation has been provided for this apparent violation of the trading hypothesis.
In the early 1980s, before the recent wave of restructurings, these low-grade bonds accounted for less than one-tenth of the total outstanding.
She adjusted the asset allocation in Michelle's portfolio to 28% large-cap, 24% mid-cap, 24% international, 19% small-cap, and 5% in low-grade bonds: "This is the best portfolio mix for someone like Michelle who is looking to invest for at least 18 more years and has a moderately aggressive risk tolerance," says Helm.
I hypothesize that periods in which the volatility and sensitivity (i.e., to the Treasury bond and equity markets) of low-grade munis relative to high-grade munis is due in part to the fact that the low-grade bonds are hybrid securities.
For example, Smirlock (1984/85) was able to identify the existence of this anomaly in low-grade bonds. In addition, Schneeweis and Woolridge (1979) presented evidence of the January effect in various bond markets (i.e., government, municipal, corporate, utilities).
Keim, in an update of an earlier analyses, discuss the myths and reality of low-grade bonds. They conclude that low-grade bonds display characteristics of both small stocks and high-grade bonds.
Keim, 1991, "The Risk and Return of Low-Grade Bonds: An Update," Financial Analysts Journal (September/October), 85-89.

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