Speculative Grade Bonds

Also known as junk bonds, these bonds have a much higher risk of default.  Because of this high risk of default, the potential yields on these bonds are much higher than bonds with better credit ratings.  Speculative grade bonds are seen as bonds with credit ratings BB and below.  Ratings are performed by private agencies such as Standard & Poor’s, Moody’s, and Fitch.

Synonyms:
junk bonds
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