High-Yield Fixed Income

The rating of a bond is directly related to the issuer’s ability to pay interest and principal payments on schedule. Taking this into consideration, high-yield fixed income products, also known as junk bonds, offer above-average interest rates due to their higher risk levels. Bonds rated as BBB (S&P) or Baa3 (Moody’s) are considered to have a high level of risk and thus pay higher coupon payments than U.S. Treasuries and high-grade corporate bonds.