What are High Yield Bonds | High Yield Bond Definition
High yield bonds, otherwise known as junk bonds, are investments that pay above average income with significant risks of decline, or even worse, risks of the issuer defaulting on the debt. Investments with a credit rating below BBB- are considered to be junk bonds. The lower the credit rating, the higher the likelihood of default. Industry standards mandate that investment professionals not only understand the risks of recommending high yield bonds and high yield funds to investors, but that investment professionals fully explain these risks, and that the recommendation be suitable for that investor, regardless of how thorough the investment professional is in explaining the investment. Brokerage firms and banks must also ensure that proper training and supervisory procedures are in place to monitor high yield bond sales.
High Yield Bond Risks | Junk Bond Risks
Investment professionals often fail to truly understand the underlying risk of investing in certain high yield bonds, or high yield bond funds. Although investors are receiving a premium to investing in investment grade fixed income, the premium is not enough to justify the uncompensated risk of doing so. High yield bond investors are at risk for substantial market declines and can potentially lose 100% of any particular high yield investment based upon market conditions.
Legal Help for Victims with High Yield Bond Losses or Junk Bond Losses
If your investment professional failed to adequately disclose all the inherent risks of investing in high yield bond investments (or junk bonds), you may have a claim for damages. The Investment Fraud Lawyers at Gilman Law LLP, a leading securities fraud law firm, are here to help you recover damages from high yield bonds. For a FREE consultation and evaluation of your case, please fill out our Free Consultation Form Online, or if you need to speak to a securities attorney right away CALL TOLL FREE (888) 252-0048 today.