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junk bond |
Also found in: Dictionary/thesaurus, Financial, Wikipedia, Hutchinson | 0.10 sec. |
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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 (mĭl`kən), 1946–, American financial executive, b. Van Nuys, Calif. ..... Click the link for more information. . junk bondBond 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. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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CREMAC originally had intended to pledge the entire portfolio as collateral in an upcoming collateralized debt obligation (CDO) offering, but the high-yield bond market conditions improved dramatically, making liquidation into the market a far more attractive alternative. IF your high-yield bond mutual fund has been a disappointment lately, put some of the blame on the Internet and the "New Economy. Scott's deep, high-yield bond investment experience and his extensive credit analysis expertise make him ideal to help expand upon SSgA's alpha-generation toolkit," said Paul Greff, director of Global Fixed Income for State Street Global Advisors. |
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