Junk Bond

Alias for high-yield bond — see also: junk-bonds entry.

In depth

Bonds rated below investment grade (BB+/Ba1 and below). Higher yields compensate for higher default risk. Spreads to Treasuries are a key gauge of risk appetite — widening high-yield spreads often precede equity selloffs.

Related terms

Junk Bonds (High Yield)

Bonds rated below investment grade, offering higher yields to compensate for higher default risk.

Credit Spread

The yield difference between a corporate or sovereign bond and a comparable Treasury.

Credit Rating

An assessment of a borrower's creditworthiness by rating agencies.

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