What is a High Yield Debt?
High yield debt offers a highly flexible and less restrictive financing alternative for many companies. High yield debt is typically used to meet longer-term fixed rate financing needs related to working capital, refinancing, recapitalizations, acquisitions, or capital expenditures. High yield securities are non-investment grade debt instruments with an S&P rating of BB+ and below or a Moody’s rate of Ba1 and below. High yield securities are registered with the SEC and commonly sold to institutional investors such as pension funds, mutual funds, and insurance companies–where a higher level of credit risk and leverage is acceptable.
