junk bond


Also found in: Dictionary, Thesaurus, Legal, Financial, Idioms, Wikipedia.
Related to junk bond: Investment grade bond

junk bond,

a bondbond,
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 buyoutsleveraged 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, MichaelMilken, 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.
.
References in periodicals archive ?
Its trailing 12-month yield of about 4.5% is roughly 80 basis points below the largest junk bond fund's corresponding yield.
High-yield bonds, sometimes referred to as "junk bonds," are non-investment grade debt with a Ba1/BB+/BB+ or below rating using rating system of Moody's Investors Service, Fitch Ratings, or Standard & Poor's.
Delhi International Airport in March sold USD 288.75 million worth 7-year junk bonds to international investors at 6.12 percent.
High-yield bonds are called junk bonds because of their higher default risk in relation to investment-grade bonds.
Some market observers are already talking about the risk of a bubble, especially in junk bonds and some emerging markets.
With the recent collapse of the junk bond market, much of the fuel for buyouts will be missing, causing buyout fever to cool.
Under the amended tax law provision, an investor who invests in a junk bond fund for more than a year and up to three years is eligible for a low 5 percent tax rate for any gains from investment up to 100 million won.
This time, the round of tightening has led to trauma in the junk bond market as yields have soared even as interest rates on higher-quality debt have remained unchanged.
We shouldn't care that GM and Ford both now have junk bond status.
on Tuesday to junk bond or non-investment-grade status, in what heralds financial difficulties for the world's largest carmaker.
Accordingly, it's not surprising that GMAC, the conglomerate's only profitable concern, has recently been rated two steps above junk bond status.
Many investors fear the junk bond market could be overwhelmed by GM and Ford debt, but some analysts say fears of excessive selling are overblown.