junk bond, a bond bond, in finance, usually a formal certificate of indebtedness issued in writing by governments or business corporations in return for loans. It bears interest and promises to pay a certain sum of money to the holder after a definite period, usually 10 to 20 years.
..... Click the link for more information. that involves greater than usual risk as an investment and pays a relatively high rate of interest, typically issued by a company lacking an established earnings history or having a questionable credit history. Junk bonds became a common means for raising business capital in the 1980s, when they were used to help finance the purchase of companies, especially by leveraged buyouts leveraged buyout, the takeover of a company, financed by borrowed funds. Often, the target company's assets are used as security for the loans acquired to finance the purchase.
..... Click the link for more information. ; the sale of junk bonds continued to be used in the 1990s to generate capital. See also Milken, Michael Milken, Michael Robert , 1946–, American financial executive, b. Van Nuys, Calif. Nicknamed the "junk bond king," he was an executive at Drexel Burnham Lambert, Inc., where he transformed corporate takeovers and financing by the use of high-yield junk bonds.
..... Click the link for more information. .

junk bond

Bond paying a high yield but also presenting greater risk than comparable securities. Junk bonds can be identified through the lower grades assigned by rating services (e.g., BBB instead of AAA for the highest quality bonds). Because the possibility of default is great, junk bonds are usually considered too risky for investment by the large institutional investors (savings and loan associations, pension funds, insurance companies, and mutual funds) that provide U.S. corporations with much of their investment capital. Junk bonds are often issued by smaller, newer companies.

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on Tuesday to junk bond or non-investment-grade status, in what heralds financial difficulties for the world's largest carmaker.

Fitch downgrades GM credit rating to junk status by Japan Weekly Monitor

Standard & Poor's sliced another notch off Electronic Data Systems' credit rating yesterday, placing the embattled services company just above junk bond level.

S&P Downgrades EDS by Computergram International

They are Mike Parton's reward for slashing debts at the troubled group which crashed from a stock market star to a junk bond in 2001.

Marconi boss scoops pounds 6m shares' bonus by Liverpool Echo (Liverpool, England)