Why credit risk is an essential value driver of high yield bonds (Part 4 of 5)
High yield issuance
A higher issuance in high yield bonds falls under the BB and B category, and few are rated in the CCC category. CCC rated bonds are highly distressed companies with relatively poor performance and few prospects of recovery.
The investor base for CCC rated bonds is very limited and is mostly issued in private, while BB and B rated bonds are highly liquid. They’re some of the best-performing and most preferred high yield asset classes, and they could be a good way to diversify your portfolio.
Browse this series on Market Realist:
- Part 1 - Why credit risk is an essential value driver of high yield bonds
- Part 2 - Spread risk: Why credit ratings are a key risk determinant
- Part 3 - Must-know: Why do lower-rated bonds have higher yields?
- Banking & Budgeting
- high yield bonds