Junk Bond
Junk bonds are bonds issues to companies with poor credit
- They are riskier than bonds issues to companies with good credit (and thus yield more)
- Investors tend to buy junk bonds during bull markets
- During good times the risk of default seems low
- Investors tend to flee junk bonds during bear markets
- During bad times junk companies are the first to go bankrupt
- Junk bonds tend to trend and reverse with equities