High-yield bonds are corporate bonds and NCDs offering a yield to maturity above 10%, well above fixed deposits and government securities. The higher yield compensates for higher credit risk — these issuers usually carry A, BBB, or unrated grades. Evaluate the issuer's creditworthiness and diversify across issuers before committing capital.
High yield bonds offer returns above 10% YTM (Yield to Maturity), significantly higher than fixed deposits and government bonds. These bonds typically come with lower credit ratings (A, BBB, or unrated) reflecting higher credit risk. They can play a role in a diversified portfolio for investors with higher risk tolerance seeking enhanced fixed income returns. Always evaluate the issuer's creditworthiness before investing.
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Why do some bonds offer yields above 10%?
Bonds with yields above 10% typically carry higher credit risk — the issuer may have a lower credit rating (A, BBB, or unrated). The higher yield compensates investors for the greater probability of default. Other factors include longer maturity, lower liquidity, and smaller issuer size.
Are high yield bonds safe to invest in?
High yield bonds carry higher risk than AAA or AA rated bonds. The risk includes potential default (issuer unable to pay interest or principal), price volatility, and lower liquidity. Diversifying across multiple issuers and limiting high-yield allocation to 10-20% of your bond portfolio can help manage risk.
How should beginners approach high yield bonds?
Beginners should start with higher-rated bonds (AAA, AA) and gradually explore high-yield options as they build experience. Key steps: understand credit ratings, never invest more than you can afford to lose in high-yield bonds, diversify across issuers, and check the issuer's financial statements before investing.
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Data is for informational purposes only. BondDekho is not SEBI-registered and does not provide investment advice. Bond yields and ratings are subject to change. Verify details on respective platforms before investing. Sorted by Yield to Maturity. Not a recommendation.