Fallen Angel
What is a Fallen Angel? A fallen angel is a bond that was rated investment-grade but has since been downgraded to junk status due to the declining financial position of its issuer. The bond is downgraded by one or more of the big three rating services – Fitch, Moody’s and Standard & Poor’s (S&P). A...
Junk Bonds
What are Junk Bonds? Junk bonds, also known as high-yield bonds, are bonds that are rated below investment grade by the big three rating agencies (see image below). Junk bonds carry a higher risk of default than other bonds, but they pay higher returns to make them attractive to investors. The main issuers of such...
Rising Star
What is a Rising Star? A Rising Star is a business or a company that is relatively new to the debt capital markets, with little or no history of debt repayment, which makes it difficult to assess its creditworthiness. Despite the lack of history, the company’s performance is strong enough to attract a certain group...
Callable Certificate of Deposit
What is a Callable Certificate of Deposit? A Callable Certificate of Deposit is an FDIC-insured time deposit with a bank or other financial institutions. Callable CDs can be redeemed by the issuer before their actual maturity date, within a specified time frame and call price. Like other regular CDs, a callable CD pays a fixed...
Discount Bond
What is a Discount Bond? A discount bond is a bond that is issued at a lower price than its par value or a bond that is trading in the secondary market at a price that is below the par value. It is similar to a zero-coupon bond, only that the latter does not pay...
