Over the month of December, the market for high-yield bonds (also known as junk bonds) had a mini-meltdown that’s raised some eyebrows.
Junk bonds, which are non-investment grade debt instruments that are issued by companies with poor credit ratings, are both high-risk and high-reward. If the companies don’t default on their payments, the bonds pay a nice premium to the investor. In fact, the risk and return on junk bonds is generally comparable with that of stocks.
Junk Bonds Finally Capitulate To Lower Oil Price Environment
Source: Visual Capitalist