Frequently Asked Questions

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How do high-yield bonds work?


A company usually works with an investment bank to create a high-yield bond offering. After the terms are finalized, the bonds are sold to investors. Bonds sold before maturity can be traded in the secondary market through brokers and dealers. Typically, company bonds pay fixed interest payments, called a ‘coupon,’ two to three times a year. At maturity, investors are expected to receive the principal amount, subject to the company’s financial position and creditworthiness.