High-Yield Bonds

High yield bonds, often called junk bonds, are debt securities issued by companies with lower credit ratings. These companies are considered riskier, which means they may struggle to repay their debts. To attract investors despite this risk, high yield bonds offer higher interest rates than safer bonds, like those from established corporations or governments. Investors seek these bonds to potentially earn greater returns, but they must be aware of the increased risk of default. Essentially, high yield bonds can be an opportunity for higher income, along with a higher chance of losing their investment.