• Teaching
    • Montessori Teacher Training 🔥
    • Yoga Teacher Training
  • Coding
    • Full Stack Development Course
    • Data Science Course
    • Python Programming Course
    • Software Testing Course
    • Architecting on AWS
  • Commerce
    • PwC Edge : Strategic Accounting and Finance Programme
    • ACCA Course
    • SAP Fico Course
    • Practical Accounting Course
    • SAP MM Course
    • HR Management Course in Kerala
  • Technical
    • Structural Design Course
    • Embedded Systems Software Engineering in Kerala
    • MEP Course
    • MEP QS Course
    • BIM Training Course
    • Quantity Survey Course
  • Finacademy
    • Forex Trading Course
    • Stock Market Course
    • Mutual Funds Course in Kerala
  • Digital Marketing
    • Digital Marketing Course
    • Performance Marketing Course
  • Language Learning
    • Spoken English Course
    • German Language Course
    • IELTS Exam Coaching
  • Exam Preparation
    • Kerala PSC Coaching
    • Kerala PSC LGS Coaching
    • KAS Coaching
    • Kerala PSC LDC Coaching
    • Kerala PSC LSGS Coaching
    • KPSC Industries Extension Officer Coaching
    • KPSC Technical Mechanical Coaching
    • KPSC Technical Electrical Coaching
    • Kerala PSC Technical Exam Preparation
    • KPSC Technical Civil Coaching
    • SBI PO Coaching
    • IBPS Clerk Coaching
    • IBPS PO Coaching
    • IBPS SO Coaching
    • Bank Exam Coaching
    • Lecturer in DIET Course
    • Kpsc HSA Coaching
    • KPSC LP UP Assistant Coaching
    • EMRS Coaching
    • KTET Coaching
    • SSC Coaching
    • SSC JE Coaching
    • SSC CGL Coaching
    • SSC CHSL Coaching
    • SSC MTS Coaching
    • UPSC Coaching
  • Health Care
    • DHA Course
    • OET Coaching
  • Other Exams
    • GATE Coaching
    • CAT Coaching
    • MAT Online Coaching
    • KMAT Online Coaching
Entri Blog
No Result
View All Result
Friday, July 18, 2025
  • Kerala PSC
    • Kerala PSC General
      • Kerala PSC Exams
      • KAS Exam
      • Kerala PSC VEO Notification
      • Kerala Police SI
      • Kerala PSC LDC Notification
      • Kerala PSC Village Field Assistant Notification
      • Kerala PSC LD Typist Notification
      • Kerala PSC Food Safety Officer
      • Kerala PSC Excise Inspector Notification
      • Kerala PSC BDO Notification
      • Kerala PSC CPO Notification
      • Kerala PSC LGS Notification
      • Fire and Rescue Officer
      • Women Fire and Rescue Officer
    • Kerala PSC Teaching
      • Kerala PSC HSA
      • Kerala PSC HSST
      • KTET
      • LP/UP Assistant
      • KVS
      • Railway Teacher
    • Kerala PSC Technical
      • LSGD AE
      • Draftsman/Overseer
      • IEO
      • ATP
      • Polytechnic Lecturer
      • AE Electronics
      • Assistant Engineer
  • Banking
    • IBPS PO Notification
    • IBPS Clerk Notification
    • SBI PO Notification
    • SBI Clerk Notification
    • SBI SO Notification
    • SBI Apprentice Notification
    • Canara Bank PO Notification
    • Indian Bank PO Notification
    • RBI Assistant Notification
    • RBI Office Attendant Notification
    • IBPS RRB Notification
    • IBPS RRB Office Assistant Notification
  • Skilling
    • Coding
    • Spoken English
    • Stock Market
      • Share Market Today News
      • Share Market Analysis
    • Digital Marketing
    • Accounting Course
    • SAP
    • OET
    • German
    • IELTS
    • Quantity Survey
    • MEP
    • Structural Design
    • Montessori
    • Yoga Teaching
    • Oil and Gas
  • Courses
    • Data Science Course
      • Data Science Malayalam
      • Data Science Course in Tamil
      • Data Science Course in Telugu
      • Data Science Training in Kochi
      • Data Science Training in Trivandrum
      • Data Science Course in Calicut
      • Data Science Training in Thrissur
    • Data Analytics Course
      • Data Analytics Course in Malayalam
      • Data Analytics Course in Tamil
      • Data Analytics Course in Telugu
    • BIM Course in Kerala
    • Quantity Surveying Course
      • Quantity Surveyor Course in Tamil
      • Quantity Surveying Course in Telugu
      • Quantity Surveyor Course in Hyderabad
      • Quantity Surveying Course in Chennai
      • Quantity Surveying Course in Vijayawada
      • Quantity Surveying Course in Guntur
      • Quantity Surveying Course in Warangal
      • Quantity Surveying Course in Karimnagar
    • Structural Design Course
      • Steel Structure Design Course
      • RCC Design Course
    • MEP Course
      • MEP Quantity Surveying Course
      • MEP Design Course in Kerala
      • HVAC Course
      • MEP Course in Kochi
    • Embedded System Course
    • Full Stack Developer Course
      • Full Stack Development Malayalam
      • Full Stack Development Hindi
      • Full Stack Development Tamil
      • Full Stack Development Telugu
      • Full Stack Development Kannada
    • Stock Market Course
      • Stock Market Course in Malayalam
      • Stock Market Course in Tamil
      • Stock Market Course in Kannada
      • Options Trading Course
    • Mutual Funds Course in Kerala
    • Mutual Funds Course in Tamil
    • Forex Trading Course
    • Spoken English Course
      • Spoken English Course in Malayalam
      • Spoken English Course in Hindi
      • Spoken English Course in Telugu
      • Spoken English Course in Tamil
      • Spoken English Course in Kannada
    • Python Programming Course
    • AI Powered Flutter
    • Ui Ux Designer Course
    • Software Testing Course
      • Software Testing Course in Malayalam
      • Software Testing Course in Tamil
      • Software Testing Course in Telugu
    • AWS Solutions Architect Associate Course
    • PwC Edge : Strategic Accounting and Finance Programme
    • Practical Accounting Course
      • Accounting Course in Malayalam
      • Accounting Course in Tamil
      • Tally Course
      • Taxation Course
      • UAE Accounting
      • GST Course
      • Zoho Books Training
      • GST Practitioner Course in Kerala
      • GCC VAT Course
    • ACCA Training Online
      • ACCA Course in Kerala
    • SAP Training Courses
      • SAP FICO Course
      • SAP MM Course
      • SAP SD Training
      • SAP FICO Course in Tamil
      • SAP MM Course in Tamil
    • HR Management Course
    • Performance Marketing Course
    • Mern Stack Developer Course
      • Full Stack Developer Course in Kochi
      • Full Stack Developer Course in Trivandrum
      • Full Stack Developer Course in Calicut
      • Full Stack Developer Course in Pune
      • Full Stack Developer Course in Bangalore
      • Full Stack Developer Course in Hyderabad
      • Full Stack Developer Course in Chennai
      • Full Stack Developer Course in Indore
      • Full Stack Developer Course in Jaipur
      • Full Stack Developer Course in Coimbatore
    • Digital Marketing Training
      • Digital Marketing Course in Kochi
      • Digital Marketing Course in Trivandrum
      • Digital Marketing Course in Calicut
      • Digital Marketing Course in Kollam
      • Digital Marketing Course in Thrissur
      • Digital Marketing Course in Kottayam
      • Digital Marketing Course in Kannur
    • Montessori Teacher Training
      • Montessori Teacher Training in Calicut
      • Montessori Teacher Training in Kochi, Ernakulam
      • Montessori Teacher Training in Trivandrum
      • Montessori Teacher Training in Kollam
      • Montessori Teacher Training in Malayalam
      • Montessori Teacher Training in Kannada
    • Other Courses
      • German Language Course
      • OET Coaching
        • OET for Pharmacist
        • OET for Nurses
      • DHA Course
      • MOH Exam Coaching
      • Nurses Recruitment Abroad
      • FMGE Coaching
      • ChatGPT Course
      • Forex Trading Course
      • Yoga Teacher Training Course
      • Diploma in Early Childhood Care and Education
      • Business Administration & Hospital Management Course
      • Hospital and Healthcare Administration
      • AI for Teachers Course
  • Others
    • Railway
      • RRB Technician Notification
      • RRB JE Notification
      • RRB ALP Notification
      • RRB NTPC Notification
      • RRB RPF Notification
      • RRB RPF SI Notification
      • RRB RPF Constable Notification
      • RRB Group D Notification
      • RRB RPSF SI Notification
      • RRB SSE Notification
    • SSC
      • SSC CPO Notification
      • SSC MTS Notification
      • SSC CGL Notification
      • SSC CHSL Notification
      • SSC GD Constable Notification
      • SSC Stenographer Notification
      • SSC JE Notification
      • SSC CAPF Notification
      • SSC JHT Notification
      • Delhi Police Constable Notification
      • Delhi Police SI Notification
    • GATE
    • MAT
    • KMAT
      • KMAT Kerala 2024
    • TET
      • APTET
      • CTET
      • DSSSB
      • Karnataka TET
      • Kerala TET
        • KTET Notification
      • KVS
      • MPTET
      • SUPER TET
      • TNTET
      • TSTET
      • UPTET
    • UPSC
      • UPSC CAPF Notification
      • UPSC CDS Notification
      • UPSC NDA Notification
      • UPSC Civil service Notification
  • Free Learn
    • Free Courses
      • Free Coding Courses
        • C Langauge Courses
        • Free Data Science Courses
        • Free Python Programming Courses
        • Free Full Stack Developer Courses
      • Free Accounting Courses
      • Free Digital Marketing Courses
        • Free SEO Courses
        • Web Development for Marketers
      • Engineering Upskilling Courses
      • Free Hospital Administration Courses
      • Free OET Training
      • Free SAP Courses
      • Free German Courses
      • Free IELTS Courses
      • Free Teachers Training Courses
      • Free Trading Courses
        • Free Stock Market Courses in Malayalam
        • Free Options Trading Course Malayalam
        • Free Forex Trading Courses Malayalam
        • Free Personal Finance Courses Malayalam
    • Question Answer
    • Aptitude Questions
    • Webinars
  • Test Prep
    • Kerala PSC Coaching
      • KPSC Degree Level Exam Preparation
      • Kerala PSC 12th Level Exam Preparation
      • Kerala PSC 10th Level Exam Preparation
      • KAS Coaching
      • Kerala PSC LDC Coaching
      • Kerala PSC LD Typist Coaching
      • Kerala PSC Fireman Coaching
      • KSFE Assistant Exam Preparation
      • Secretariat Office Attendant Coaching
      • Secretariat Assistant Coaching
      • Kerala PSC SI Exam Coaching
      • Khadi Board LDC Exam Preparation
      • Devaswom Board LDC Coaching
      • University LGS Exam Preparation
      • University Assistant Exam Coaching
      • KPSC Scientific Officer Exam Coaching
      • KPSC Probation Officer Grade II
      • KPSC Food Safety Officer Coaching
      • KWA Sanitary Chemist Coaching
      • KPSC Diary Farm Instructor Exam Coaching
      • Kerala PSC KWA Lab Assistant Exam Coaching
      • Kerala PSC ICDS Supervisor Exam Coaching
      • KPSC Finger Print Searcher Coaching
      • Kerala PSC Welfare Officer Gr. II Exam Coaching
      • KPSC Assistant Dental Surgeon Coaching
    • KPSC Teaching Exams
      • HSA Exam Preparation
      • KPSC HSA Social Science Coaching
      • KPSC HSA Physical Science Coaching
      • KPSC HSA English Coaching
      • KPSC Junior Language Teacher Hindi
      • KTET Coaching
      • SET Coaching
      • LP/UP Assistant Exam Coaching
      • HSST Exam Preparation
      • HSST Commerce Exam Coaching
      • Kerala PSC Lecturer in Diet Coaching
      • KVS PGT/TGT Coaching
    • Kerala PSC Technical Exams Coaching
      • Assistant Engineer Electrical Exam Coaching
      • Assistant Engineer Electronics Coaching
      • Assistant Engineer Mechanical Coaching
      • Kerala PSC Industries Extension Officer Coaching
      • KPSC LSGD AE Exam Coaching
      • KPSC Civil Engineering Exam Coaching
      • KPSC Mechanical Engineering Exam Coaching
      • KPSC Electrical Engineering Exam Coaching
      • KPSC Electronics Engineering Exam Coaching
      • KPSC Technical Computer Science Coaching
      • KPSC Tradesman Turning Coaching
      • Kerala PSC Overseer Exam Coaching
      • KPSC Assistant Town Planner Coaching
      • Lecturer in Polytechnic Electronics Coaching
    • Teaching Exams Coaching
      • CSIR NET Exam Coaching
      • EMRS Coaching
      • CTET Exam Online Coaching
    • IELTS Training Online
    • Bank Exam Coaching Online
      • SEBI Grade A Coaching
      • IBPS SO Online Coaching
      • IBPSC PO Online Coaching
      • IBPSC Clerk Online Coaching
      • SBI PO Coaching
      • SBI Clerk Online Coaching
      • SBI Apprentice Class
      • SBI SO Online Coaching
      • RBI Grade B Coaching
      • RBI Assistant Coaching
      • CSEB Exam Coaching
      • IBPS RRB Coaching
      • IBPS RRB PO Coaching
      • Canara Bank Po Exam Coaching
      • Kerala Gramin Bank Coaching
      • Kerala Bank Exam Coaching
        • Kerala Bank Clerk Exam Coaching
        • Kerala Bank Office Attendant Exam Coaching
        • Kerala Bank Assistant Manager Exam Coaching
      • JCI Exam Coaching
      • NABARD Grade A Coaching
      • LIC AAO Coaching Online
    • UPSC Online Coaching
      • UPSC CAPF Online Coaching
    • SSC Online Coaching
      • SSC JE Online Coaching
      • SSC CGL Coaching
      • SSC CGL AAO Coaching
      • SSC CHSL Coaching
      • SSC CGL CBI Inspector Coaching
      • SSC MTS Coaching
      • SSC Stenographer Coaching
      • SSC GD Online Coaching
    • RRB Exams Coaching
      • RRB RPF Exam Coaching
      • RRB NTPC Exam Coaching
      • RRB JE Online Coaching
      • RRB JE Electronics Coaching
      • RRB ALP Exam Coaching
      • RRB Technician Exam Coaching
    • CAT Online Coaching
    • CMAT Online Coaching
    • XAT Exam Coaching
    • GATE Online Coaching
      • GATE CE Online Coaching
      • GATE ME Online Coaching
      • GATE EE Online Coaching
    • NMAT Exam Coaching
      • AAI ATC Jr Executive Coaching
    • Cochin Shipyard Executive Trainee Coaching
    • BEL Probationary Engineer Coaching
    • HPCL Junior Executive Coaching
Free Courses
Entri Blog
  • HTML Tutorial
  • DSA Tutorials
  • Tutorials in Hindi
    • HTML Tutorial for Beginners in Hindi
    • Python Tutorial for Beginners in Hindi
    • GIT and GITHUB Tutorial for Beginners in Hindi
  • Tutorials in Tamil
    • JavaScript Tutorial in Tamil
  • Tutorials in Telugu
    • HTML Tutorial For Beginners in Telugu
    • CSS Tutorial for Beginners in Telugu
    • Bootstrap Tutorial for Beginner in Telugu
  • Tutorials in Kannada
    • HTML Tutorial For Beginners in Kannada
entri exclusive offers entri exclusive offers
Home Articles

What are Junk Bonds?

by Aleena V Noushad
April 14, 2025
in Articles, General Knowledge, Stock Marketing
What are Junk Bonds?
Share on FacebookShare on WhatsAppShare on Telegram

Table of Contents

  • What Is a Junk Bond?
  • Deeper definition
  • History of Junk Bonds
  • Who Buys Junk Bonds?
  • Are junk bonds a good investment?
  • Junk Bonds as a Market Indicator
  • Credit Ratings and Junk Bonds
  • Real World Example of a Junk Bond
  • Examples of junk bond companies

What Is a Junk Bond?

Junk bonds are bonds that carry a higher risk of default than most bonds issued by corporations and governments. A bond is a debt or promise to pay investors interest payments along with the return of invested principal in exchange for buying the bond. Junk bonds represent bonds issued by companies that are financially struggling and have a high risk of defaulting or not paying their interest payments or repaying the principal to investors.

Junk bonds are also called high-yield bonds since the higher yield is needed to help offset any risk of default.

Deeper definition

1: What is a stock?

2: Who is a stockbroker?

3: What does IPO stand for?

4: Which of the following is a stock exchange in India?

5: What is a dividend?

    Fill out the form to see the results



    Ever wondered how much you really know? It's time to put your brain to the test!

    A bond is a way of lending money to a company. The company accepts the money for the bond with the agreement that it repays the initial loan with interest when the bond matures. They usually have a credit rating from a financial services company like Standard & Poor’s that reflects the ability of the company to meet its payment obligations when the bond matures. A healthy rating means a bond is likely to generate a lot of revenue, which goes toward the bond issuer’s payments on its principal and interest. These bonds are called investment-grade.

     

    Junk bonds have low credit ratings, meaning there’s a high risk of default or the potential for other adverse credit events. However, where long-term investors favor reliable, income-producing bonds, speculators may prefer to shoulder the risks of a high-yield, non-investment-grade bond.

    Investors may expect the bond issuer’s revenue to pick up, if, for example, it’s in an industry undergoing a temporary slump. In that case, there’s potential for a significant windfall on a high-yield investment. But, absent any information about the company’s financial prospects, it’s just as likely that it’ll miss a payment and the purchaser could lose money.

    Junk bonds also offer strong investment opportunities during periods when interest rates are low and more reliable investment options are offering poor returns. This is because the high yields and short maturities of junk bonds are less affected by interest rates, an increase in the issuing company’s revenue may improve the health of a junk bond even when interest rates stay low.

    SEBI-Compliant Stock Market Training

    Trusted, practical strategies to help you grow with confidence. Enroll now and start investing the right way.

    Know more

    History of Junk Bonds

    The United States government started using junk bonds in the 1780s as a way of financing an unproven government. At the time, the country’s risk of default was high. Therefore, not many international lenders were willing to lend unless the investment offered high returns.

    Junk bonds returned in the early 1900s as a form of financing startups. Companies like General Motors and IBM were at their early stages at the time. Few banks were willing to extend credit to companies without a track record. In the 1970s and 1980s, the junk bond market experienced a boom due to fallen angel companies. Fallen angels are companies that had previously issued investment-grade bonds, but that experienced a drop in their credit rating.

    Research published by Braddock Hickman, Thomas Atkinson, and Orina Burrell also contributed to the 1970s to 1980s boom. The study showed that junk bonds paid higher returns than was necessary to compensate for the extra risk involved. Drexel Burnham used this research to build a large junk bond market. Their investments in junk bonds grew from $10 billion to $189 billion between 1979 to 1989. The average returns stood at 14.5%, while the defaults were only 2.2%. Unfortunately, the market suffered a blow after Drexel was brought down by illegal trading activities. Drexel was eventually forced into bankruptcy.

    Who Buys Junk Bonds?

    The obvious caveat is that junk bonds are a high-risk investment. There’s a risk that the issuer will file for bankruptcy and you’ll never get your money back.

    There is a market for junk bonds, but it is overwhelmingly dominated by institutional investors who can hire analysts with knowledge of specialized credit.

    This does not mean that junk-bond investing is strictly for the wealthy.

    Are junk bonds a good investment?

    Although they pay higher yields, junk bonds also have unique risks that investors should be aware of before making any investment. Here are some the advantages and disadvantages of investing in junk bonds:

    Pros Cons
    Higher interest rates than for investment-grade bonds. Comparatively high risk of the bond issuer missing an interest payment.
    Lower risk of losing money as compared to stocks. Greater fluctuations in trading prices relative to investment-grade bonds.
    Junk bond prices are less volatile than stock prices during periods of economic uncertainty. Subject to a partial or total loss of value if the issuing company declares bankruptcy.
    Provide a steady stream of income at an attractive interest rate. Not suitable as short-term investments since junk bond prices fluctuate in the years before maturity.

    SEBI-Compliant Stock Market Training

    Trusted, practical strategies to help you grow with confidence. Enroll now and start investing the right way.

    Know more

    Junk Bonds as a Market Indicator

    Some investors buy junk bonds to profit from potential price increases as the financial security of the underlying company improves, and not necessarily for the return of interest income. Also, investors that predict bond prices to rise are betting there will be increased buying interest for high-yield bonds—even these lower rated ones—due to a change in market risk sentiment. For example, if investors believe economic conditions are improving in the U.S. or abroad, they might purchase junk bonds of companies that will show improvement along with the economy.

    As a result, increased buying interest of junk bonds serves as a market-risk indicator for some investors. If investors are buying junk bonds, market participants are willing to take on more risk due to a perceived improving economy. Conversely, if junk bonds are selling off with prices falling, it usually means that investors are more risk averse and are opting for more secure and stable investments.

    Although a surge in junk bond investing usually translates to increased optimism in the market, it could also point to too much optimism in the market.

    It’s important to note that junk bonds have much larger price swings than bonds of higher quality. Investors looking to purchase junk bonds can either buy the bonds individually through a broker or invest in a junk bond fund managed by a professional portfolio manager.

    Related Articles (1) Related Articles (2)
    Is Stock Market Risky And Dangerous For Beginners? Pump and Dump Scheme – Definition, Ways to Spot It
    What are the Risky Factors for Stock Market Trading? What is a ‘Fat-Finger Trade’ or Freak Trade?
    How Do People Lose Money in the Stock Market? How does Recession Affect Stock Market?
    Critical Factors that could be Disastrous for Stock Market in the Long Run What Is Recession? How Does It Impact Stock Market?
    Stock Market Crash – Definition, Causes, Examples Problems of Stock Exchange Listing
    History of Stock Market Crashes In India High Inflation Rates and Scarcity
    What Caused Black Monday in 1987? Know Its Effects Common Investment Mistakes to Avoid as a Beginner
    2007–2008 Financial Crisis – Definition, Causes, Effects How Corporate Actions Impacts Stock Price?
    Impact of Global Events on the Indian Stock Market Impact of Interest Rate Hikes

    Credit Ratings and Junk Bonds

    Although junk bonds are considered risky investments, investors can monitor a bond’s level of risk by reviewing the bond’s credit rating. A credit rating is an assessment of the creditworthiness of an issuer and its outstanding debt in the form of bonds. The company’s credit rating, and ultimately the bond’s credit rating, impact the market price of a bond and its offering interest rate.

    Credit-rating agencies measure the creditworthiness of all corporate and government bonds, giving investors insight into the risks involved in the debt securities. Credit rating agencies assign letter grades for their view of the issue.

    For example, Standard & Poor’s has a credit rating scale ranging from AAA—excellent—to lower ratings of C and D. Any bond that carries a rating lower than BB is said to be of speculative-grade or a junk bond. This should be a red flag to risk-averse investors. The various letter grades from credit agencies represent the financial viability of the company and the likelihood that the contract terms of the bond terms will be honored.

    Investment Grade

    Bonds with a rating of investment-grade come from corporations that have a high probability of paying the regular coupons and returning the principal to investors. For example, Standard & Poor’s ratings include:

    • AAA—excellent
    • AA—very good
    • A—good
    • BBB—adequate

    “Junk” (Speculative)

    As mentioned earlier, once a bond’s rating drops into the double-B category, it falls into the junk bond territory. This area can be a scary place for investors who would be harmed by a total loss of their investment dollars in the case of a default.

    Some speculative ratings include:

    • CCC—currently vulnerable to nonpayment
    • C—highly vulnerable to nonpayment
    • D—in default

    Companies having bonds with these low credit ratings might have difficulty raising the capital needed to fund ongoing business operations. However, if a company manages to improve its financial performance and it’s bond’s credit rating is upgraded, a substantial appreciation in the bond’s price could happen. Conversely, if a company’s financial situation deteriorates, the credit rating of the company and its bonds might be downgraded by credit rating agencies. It is crucial for investors in junk debt to fully investigate the underlying business and all financial documents available before buying

    Real World Example of a Junk Bond

    Tesla Inc. (TSLA) issued a fixed-rate bond with a maturity date of March 1, 2021 and a fixed semi-annual coupon rate of 1.25%. The debt received an S&P rating of B- in 2014 when it was issued. In October 2020, S&P upgraded its rating to BB- from B+. This is still in junk bond rating territory. A BB rating from S&P means the rating issue is less vulnerable to nonpayment, but still faces major uncertainties or exposure to adverse business or economic conditions.

    Also, the current price of the Tesla offering is $577 as of Oct. 2020, much higher than its 2014 $100 face value, which represents the extra yield that investors are getting above the coupon payment. In other words, despite the BB- rating, the bond is trading at very large premium to its face value. This is because the bonds are convertible to equity. Thus, with shares of Tesla soaring 600% over the last twelve months ending Oct. 26, 2020, the bonds are proving to be valuable surrogates for the equity.

    Examples of junk bond companies

    Quite a few well-known companies have below-investment-grade credit ratings. Notable businesses with credit ratings that give them “junk” status include:

    • Ford (NYSE:F): Ford has been rated as investment-grade in the past, but the company lost its investment-grade ratings in 2020 due to the coronavirus pandemic and global economic collapse. Its junk bonds still trade at a premium, reflecting the company’s legacy status.
    • Tesla (NASDAQ:TSLA): Tesla is a younger, newer company, and its junk-rated debt is a product of its financial track record. Its focus on growth has caused Tesla to only very recently start generating positive free cash flow, although the company is making progress toward becoming investment-grade.
    • Netflix (NASDAQ:NFLX): Netflix also falls into this category of growth-oriented companies. The company generated negative free cash flow for years to pay for new content creation for its streaming service, issuing junk bonds as part of its strategy to fund in-house production of movies and TV shows. Netflix’s bonds, which also trade at a premium, have gained slightly more value as the company has gotten closer to producing positive free cash flow. The company’s improving credit rating makes it likely that Netflix will eventually achieve investment-grade status.

    Junk bonds are a significant part of the bond market, but that doesn’t mean they should be a big part of your portfolio. For many individual investors, it’s OK to skip junk bonds completely. For others, this type of holding should represent a relatively small portion of your portfolio and is best purchased through diverse ETFs.

    Unlike that pile in your basement, you may find junk desirable for your investment portfolio. Just invest carefully and make sure you understand the risks before hitting the buy button.

    Achieve Financial Freedom with these courses?

    Stock Market Trading Course

    Forex Trading Course

    Mutual Funds Course

    Share61SendShare

    Aleena V Noushad

    Aleena is a passionate Blog writer and a Postgraduate in Master of Computer Application. She also holds a diploma in Aviation and Hospitality. She has been writing for Entri over the past three years, specialising in exam preparation and skill and career development

    Related Posts

    How to Develop Saving Habit in Children
    Articles

    How to Develop Saving Habit in Children?

    July 18, 2025
    The Ultimate Guide to Ausbildung in Germany Eligibility, Process & Career Opportunities
    Articles

    The Ultimate Guide to Ausbildung in Germany: Eligibility, Process & Career Opportunities

    July 18, 2025
    top books for performance marketing
    Articles

    15 Best Performance Marketing Books for 2025 (Expert Picks)

    July 18, 2025
    Next Post
    Why Choose RBI Grade B Officer as a Career?

    Why Choose RBI Grade B Officer as a Career?

    stock market course stock market course stock market course

    Different Trading and Investment Courses

    1. Stock Market Courses in Malayalam
    2. Stock Market Courses in Tamil
    3. Stock Market Courses in Kannada
    4. Forex Trading Course
    5. Mutual Funds Course in Kerala
    6. Mutual Funds Course in Tamil
    7. Online Options Trading Course

    City wise Trading Course:

    • Stock Market Training in Kochi
    • Stock Market Course in Trivandrum
    • Stock Market Course in Calicut
    • Stock Market Course in Bangalore
    • Stock Market Course in Chennai
    • Stock Market Course in Coimbatore

    Explore More

    1. Daily Post Stock Market Analysis
    2. Impact of Global Events on the Indian Stock Market
    3. Differences between Rights Shares and Bonus Shares
    4. Indian vs US Stock Market
    5. Difference Between Stock Market And Share Market
    6. How are Stocks Different from Other Investments?
    7. Intraday Option Trading – Strategies
    8. 15 Candlestick Patterns
    9. The Impact of Technology on the Stock Market
    10. Problems of Stock Exchange Listing
    11. What Are Different Types Of Stocks?
    12. How do Mergers and Acquisitions Affect Stock Prices?
    13. What is Short Selling in Stock Market?
    14. How to Trade Options: Strategies for Beginners

    Courses

    • Data Science Course
    • Full Stack Developer Course
    • Software Testing Course
    • Data Science Course in Malayalam
    • Full Stack Developer Course in Malayalam
    • Full Stack Developer Course in Hindi
    • Full Stack Developer Course in Tamil
    • Full Stack Developer Course in Telugu
    • Full Stack Developer Course in Kannada
    • Python Programming Course
    • Practical Accounting Course
    • Structural Design Course
    • Quantity Surveying Course
    • Embedded Systems Course in Kerala
    • BIM Course
    • MEP Course
    • MEP QS Course
    • Stock Market Course
    • Stock Market Course in Malayalam
    • Stock Market Course in Tamil
    • Stock Market Course in Kannada
    • Forex Trading Course
    • Mutual Funds Course in Kerala
    • Mutual Funds Course in Tamil
    • PwC Edge : Strategic Accounting and Finance Programme
    • SAP FICO Training
    • SAP MM Training
    • SAP SD Training
    • ACCA Online Course
    • HR Management Course

    Company

    • Become a teacher
    • Login to Entri Web

    Spoken English Courses

    • Spoken English Course
    • Spoken English Course in Malayalam
    • Spoken English Course in Hindi
    • Spoken English Course in Tamil
    • Spoken English Course in Telugu
    • Spoken English Course in Kannada
    • Spoken English Course for Housewives
    • Spoken English Course for Working Professionals
    • Spoken English Course for School Students
    • Spoken English Course for College Students
    • Spoken English Course for Job Seekers
    • AI Powered Spoken English Course

    Quick Links

    • Explore Free Courses
    • Aptitude Questions
    • Articles
    • Videos
    • Entri Daily Quiz Practice
    • Current Affairs & GK
    • News Capsule – eBook
    • Preparation Tips
    • Kerala PSC Gold
    • Entri Skilling
    • Kerala PSC

    Other Courses

    • OET Coaching Classes
    • DHA Course
    • Nurse Recruitment Abroad
    • Montessori Teachers Training
    • Performance Marketing Course
    • German Language Course
    • Yoga Teacher Training Course
    • Digital Marketing Course
    • Options Trading Course
    • German Language A1 Course
    • German Language A2 Course
    • German Language B1 Course
    • German Language B2 Course
    • Diploma in Early Childhood Care and Education
    • Hospital and Healthcare Administration
    • Business Administration & Hospital Management
    • Hospital and Healthcare Administration

    Popular Exam

    • IBPS Exam
    • SBI Exam
    • Railway RRB Exam
    • Kerala PSC
    • Tamil Nadu PSC
    • Telangana PSC
    • Andhra Pradesh PSC
    • MPPSC
    • UPPSC
    • Karnataka PSC
    • Staff Selection Commission Exam
    • GATE

    © 2023 Entri.app - Privacy Policy | Terms of Service

    No Result
    View All Result
    • Kerala PSC
      • Kerala PSC General
        • Kerala PSC Exams
        • KAS Exam
        • Kerala PSC VEO Notification
        • Kerala Police SI
        • Kerala PSC LDC Notification
        • Kerala PSC Village Field Assistant Notification
        • Kerala PSC LD Typist Notification
        • Kerala PSC Food Safety Officer
        • Kerala PSC Excise Inspector Notification
        • Kerala PSC BDO Notification
        • Kerala PSC CPO Notification
        • Kerala PSC LGS Notification
        • Fire and Rescue Officer
        • Women Fire and Rescue Officer
      • Kerala PSC Teaching
        • Kerala PSC HSA
        • Kerala PSC HSST
        • KTET
        • LP/UP Assistant
        • KVS
        • Railway Teacher
      • Kerala PSC Technical
        • LSGD AE
        • Draftsman/Overseer
        • IEO
        • ATP
        • Polytechnic Lecturer
        • AE Electronics
        • Assistant Engineer
    • Banking
      • IBPS PO Notification
      • IBPS Clerk Notification
      • SBI PO Notification
      • SBI Clerk Notification
      • SBI SO Notification
      • SBI Apprentice Notification
      • Canara Bank PO Notification
      • Indian Bank PO Notification
      • RBI Assistant Notification
      • RBI Office Attendant Notification
      • IBPS RRB Notification
      • IBPS RRB Office Assistant Notification
    • Skilling
      • Coding
      • Spoken English
      • Stock Market
        • Share Market Today News
        • Share Market Analysis
      • Digital Marketing
      • Accounting Course
      • SAP
      • OET
      • German
      • IELTS
      • Quantity Survey
      • MEP
      • Structural Design
      • Montessori
      • Yoga Teaching
      • Oil and Gas
    • Courses
      • Data Science Course
        • Data Science Malayalam
        • Data Science Course in Tamil
        • Data Science Course in Telugu
        • Data Science Training in Kochi
        • Data Science Training in Trivandrum
        • Data Science Course in Calicut
        • Data Science Training in Thrissur
      • Data Analytics Course
        • Data Analytics Course in Malayalam
        • Data Analytics Course in Tamil
        • Data Analytics Course in Telugu
      • BIM Course in Kerala
      • Quantity Surveying Course
        • Quantity Surveyor Course in Tamil
        • Quantity Surveying Course in Telugu
        • Quantity Surveyor Course in Hyderabad
        • Quantity Surveying Course in Chennai
        • Quantity Surveying Course in Vijayawada
        • Quantity Surveying Course in Guntur
        • Quantity Surveying Course in Warangal
        • Quantity Surveying Course in Karimnagar
      • Structural Design Course
        • Steel Structure Design Course
        • RCC Design Course
      • MEP Course
        • MEP Quantity Surveying Course
        • MEP Design Course in Kerala
        • HVAC Course
        • MEP Course in Kochi
      • Embedded System Course
      • Full Stack Developer Course
        • Full Stack Development Malayalam
        • Full Stack Development Hindi
        • Full Stack Development Tamil
        • Full Stack Development Telugu
        • Full Stack Development Kannada
      • Stock Market Course
        • Stock Market Course in Malayalam
        • Stock Market Course in Tamil
        • Stock Market Course in Kannada
        • Options Trading Course
      • Mutual Funds Course in Kerala
      • Mutual Funds Course in Tamil
      • Forex Trading Course
      • Spoken English Course
        • Spoken English Course in Malayalam
        • Spoken English Course in Hindi
        • Spoken English Course in Telugu
        • Spoken English Course in Tamil
        • Spoken English Course in Kannada
      • Python Programming Course
      • AI Powered Flutter
      • Ui Ux Designer Course
      • Software Testing Course
        • Software Testing Course in Malayalam
        • Software Testing Course in Tamil
        • Software Testing Course in Telugu
      • AWS Solutions Architect Associate Course
      • PwC Edge : Strategic Accounting and Finance Programme
      • Practical Accounting Course
        • Accounting Course in Malayalam
        • Accounting Course in Tamil
        • Tally Course
        • Taxation Course
        • UAE Accounting
        • GST Course
        • Zoho Books Training
        • GST Practitioner Course in Kerala
        • GCC VAT Course
      • ACCA Training Online
        • ACCA Course in Kerala
      • SAP Training Courses
        • SAP FICO Course
        • SAP MM Course
        • SAP SD Training
        • SAP FICO Course in Tamil
        • SAP MM Course in Tamil
      • HR Management Course
      • Performance Marketing Course
      • Mern Stack Developer Course
        • Full Stack Developer Course in Kochi
        • Full Stack Developer Course in Trivandrum
        • Full Stack Developer Course in Calicut
        • Full Stack Developer Course in Pune
        • Full Stack Developer Course in Bangalore
        • Full Stack Developer Course in Hyderabad
        • Full Stack Developer Course in Chennai
        • Full Stack Developer Course in Indore
        • Full Stack Developer Course in Jaipur
        • Full Stack Developer Course in Coimbatore
      • Digital Marketing Training
        • Digital Marketing Course in Kochi
        • Digital Marketing Course in Trivandrum
        • Digital Marketing Course in Calicut
        • Digital Marketing Course in Kollam
        • Digital Marketing Course in Thrissur
        • Digital Marketing Course in Kottayam
        • Digital Marketing Course in Kannur
      • Montessori Teacher Training
        • Montessori Teacher Training in Calicut
        • Montessori Teacher Training in Kochi, Ernakulam
        • Montessori Teacher Training in Trivandrum
        • Montessori Teacher Training in Kollam
        • Montessori Teacher Training in Malayalam
        • Montessori Teacher Training in Kannada
      • Other Courses
        • German Language Course
        • OET Coaching
        • DHA Course
        • MOH Exam Coaching
        • Nurses Recruitment Abroad
        • FMGE Coaching
        • ChatGPT Course
        • Forex Trading Course
        • Yoga Teacher Training Course
        • Diploma in Early Childhood Care and Education
        • Business Administration & Hospital Management Course
        • Hospital and Healthcare Administration
        • AI for Teachers Course
    • Others
      • Railway
        • RRB Technician Notification
        • RRB JE Notification
        • RRB ALP Notification
        • RRB NTPC Notification
        • RRB RPF Notification
        • RRB RPF SI Notification
        • RRB RPF Constable Notification
        • RRB Group D Notification
        • RRB RPSF SI Notification
        • RRB SSE Notification
      • SSC
        • SSC CPO Notification
        • SSC MTS Notification
        • SSC CGL Notification
        • SSC CHSL Notification
        • SSC GD Constable Notification
        • SSC Stenographer Notification
        • SSC JE Notification
        • SSC CAPF Notification
        • SSC JHT Notification
        • Delhi Police Constable Notification
        • Delhi Police SI Notification
      • GATE
      • MAT
      • KMAT
        • KMAT Kerala 2024
      • TET
        • APTET
        • CTET
        • DSSSB
        • Karnataka TET
        • Kerala TET
        • KVS
        • MPTET
        • SUPER TET
        • TNTET
        • TSTET
        • UPTET
      • UPSC
        • UPSC CAPF Notification
        • UPSC CDS Notification
        • UPSC NDA Notification
        • UPSC Civil service Notification
    • Free Learn
      • Free Courses
        • Free Coding Courses
        • Free Accounting Courses
        • Free Digital Marketing Courses
        • Engineering Upskilling Courses
        • Free Hospital Administration Courses
        • Free OET Training
        • Free SAP Courses
        • Free German Courses
        • Free IELTS Courses
        • Free Teachers Training Courses
        • Free Trading Courses
      • Question Answer
      • Aptitude Questions
      • Webinars
    • Test Prep
      • Kerala PSC Coaching
        • KPSC Degree Level Exam Preparation
        • Kerala PSC 12th Level Exam Preparation
        • Kerala PSC 10th Level Exam Preparation
        • KAS Coaching
        • Kerala PSC LDC Coaching
        • Kerala PSC LD Typist Coaching
        • Kerala PSC Fireman Coaching
        • KSFE Assistant Exam Preparation
        • Secretariat Office Attendant Coaching
        • Secretariat Assistant Coaching
        • Kerala PSC SI Exam Coaching
        • Khadi Board LDC Exam Preparation
        • Devaswom Board LDC Coaching
        • University LGS Exam Preparation
        • University Assistant Exam Coaching
        • KPSC Scientific Officer Exam Coaching
        • KPSC Probation Officer Grade II
        • KPSC Food Safety Officer Coaching
        • KWA Sanitary Chemist Coaching
        • KPSC Diary Farm Instructor Exam Coaching
        • Kerala PSC KWA Lab Assistant Exam Coaching
        • Kerala PSC ICDS Supervisor Exam Coaching
        • KPSC Finger Print Searcher Coaching
        • Kerala PSC Welfare Officer Gr. II Exam Coaching
        • KPSC Assistant Dental Surgeon Coaching
      • KPSC Teaching Exams
        • HSA Exam Preparation
        • KPSC HSA Social Science Coaching
        • KPSC HSA Physical Science Coaching
        • KPSC HSA English Coaching
        • KPSC Junior Language Teacher Hindi
        • KTET Coaching
        • SET Coaching
        • LP/UP Assistant Exam Coaching
        • HSST Exam Preparation
        • HSST Commerce Exam Coaching
        • Kerala PSC Lecturer in Diet Coaching
        • KVS PGT/TGT Coaching
      • Kerala PSC Technical Exams Coaching
        • Assistant Engineer Electrical Exam Coaching
        • Assistant Engineer Electronics Coaching
        • Assistant Engineer Mechanical Coaching
        • Kerala PSC Industries Extension Officer Coaching
        • KPSC LSGD AE Exam Coaching
        • KPSC Civil Engineering Exam Coaching
        • KPSC Mechanical Engineering Exam Coaching
        • KPSC Electrical Engineering Exam Coaching
        • KPSC Electronics Engineering Exam Coaching
        • KPSC Technical Computer Science Coaching
        • KPSC Tradesman Turning Coaching
        • Kerala PSC Overseer Exam Coaching
        • KPSC Assistant Town Planner Coaching
        • Lecturer in Polytechnic Electronics Coaching
      • Teaching Exams Coaching
        • CSIR NET Exam Coaching
        • EMRS Coaching
        • CTET Exam Online Coaching
      • IELTS Training Online
      • Bank Exam Coaching Online
        • SEBI Grade A Coaching
        • IBPS SO Online Coaching
        • IBPSC PO Online Coaching
        • IBPSC Clerk Online Coaching
        • SBI PO Coaching
        • SBI Clerk Online Coaching
        • SBI Apprentice Class
        • SBI SO Online Coaching
        • RBI Grade B Coaching
        • RBI Assistant Coaching
        • CSEB Exam Coaching
        • IBPS RRB Coaching
        • IBPS RRB PO Coaching
        • Canara Bank Po Exam Coaching
        • Kerala Gramin Bank Coaching
        • Kerala Bank Exam Coaching
        • JCI Exam Coaching
        • NABARD Grade A Coaching
        • LIC AAO Coaching Online
      • UPSC Online Coaching
        • UPSC CAPF Online Coaching
      • SSC Online Coaching
        • SSC JE Online Coaching
        • SSC CGL Coaching
        • SSC CGL AAO Coaching
        • SSC CHSL Coaching
        • SSC CGL CBI Inspector Coaching
        • SSC MTS Coaching
        • SSC Stenographer Coaching
        • SSC GD Online Coaching
      • RRB Exams Coaching
        • RRB RPF Exam Coaching
        • RRB NTPC Exam Coaching
        • RRB JE Online Coaching
        • RRB JE Electronics Coaching
        • RRB ALP Exam Coaching
        • RRB Technician Exam Coaching
      • CAT Online Coaching
      • CMAT Online Coaching
      • XAT Exam Coaching
      • GATE Online Coaching
        • GATE CE Online Coaching
        • GATE ME Online Coaching
        • GATE EE Online Coaching
      • NMAT Exam Coaching
        • AAI ATC Jr Executive Coaching
      • Cochin Shipyard Executive Trainee Coaching
      • BEL Probationary Engineer Coaching
      • HPCL Junior Executive Coaching

    © 2023 Entri.app - Privacy Policy | Terms of Service

    Chat