joukkovelkakirjalla

Joukkovelkakirjalla, known in English as a "junk bond" or "high-yield bond," is a type of debt security that pays a higher interest rate than investment-grade bonds. This higher yield is offered to compensate investors for the increased risk of default associated with the issuer. Junk bonds are issued by companies that have a lower credit rating, meaning they are considered more likely to be unable to repay their debt.

These bonds are typically issued by companies with less established credit histories, or those that are undergoing financial restructuring or are in a speculative industry. Investors who purchase junk bonds are seeking higher returns than they could obtain from safer investments, but they must be aware of the significant risk of losing their principal investment if the issuer defaults. The market for junk bonds is generally less liquid than that for investment-grade bonds, meaning it can be harder to sell them quickly without affecting their price.

The analysis of junk bonds involves a careful assessment of the issuer's financial health, industry outlook, and overall economic conditions. Credit rating agencies assign ratings to these bonds, with lower ratings indicating a higher risk of default. For instance, ratings below BBB- from Standard & Poor's or Baa3 from Moody's are generally considered to be in the junk bond category. Despite the risks, junk bonds can be an attractive option for investors with a higher risk tolerance looking to diversify their portfolios and potentially achieve greater returns.