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Types of Bonds

What Do High-Yield Bonds Have in Common?

Although high-yield bonds are issued in various packages, most new bonds share some basic characteristics.

The average dollar value of a new issue of high-yield bonds has consistently been around $200 million in recent years. Nearly 90% of the market is considered reasonably liquid, with issue sizes of over $100 million.

Maturities typically are 10 years or less. Few high-yield issues have the longer maturities generally associated with investment-grade corporate and municipal bonds. In fact, many high-yield issues are called “notes” rather than bonds because of their shorter maturities.

Call protection often extends for the first five years. This means that the purchaser of a newly issued high-yield bond can count on at least five years of interest payments before the issuer has an option to retire the bond at a specified price.

 

All information and opinions contained in this publication were produced by the Securities Industry and Financial Markets Association from our membership and other sources believed by the Association to be accurate and reliable. By providing this general information, the Securities Industry and Financial Markets Association makes neither a recommendation as to the appropriateness of investing in fixed-income securities nor is it providing any specific investment advice for any particular investor. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and sources may be required to make informed investment decisions.