High-yield debt

High-yield debt, often referred to as "junk bonds," is a type of bond that carries a higher risk of default compared to investment-grade bonds. These bonds are issued by companies or entities that have lower credit ratings, typically rated below BBB- by Standard & Poor's or below Baa3 by Moody's. Because of the increased risk associated with high-yield debt, these bonds offer higher interest rates (or yields) to attract investors.