High Yield / Non-Investment Grade Corporate Notes
High-yield corporate notes are issued by corporations that do not qualify for ‘investment-grade’ ratings by one of the leading credit rating agencies, such as Moody’s Investors Service and Standard & Poor’s Ratings Services1. Credit rating agencies evaluate issuers and assign ratings based on their opinions of the issuer’s ability to pay interest and principal as scheduled. Those issuers with a greater risk of default - not paying interest or principal in a timely manner - are rated below investment grade. These issuers must pay a higher interest rate to attract investors to buy their notes and to compensate them for the risks associated with investing in organizations of lower credit quality.
The credit quality of the notes is based primarily on the likelihood of possible default, resulting in investors losing their principal. Rating agencies utilize data provided by the note issuers, and other public and non-public data, to evaluate the likelihood of default for a note assigned with a particular rating, while also applying other risk factors in assigning a specific rating. The chart in the Ratings section describes common note/bond ratings and includes a general description of each2. For precise ratings descriptions, visit the respective ratings agency websites.
1. Specific ratings are subject to change without notice by the respective ratings agency.
2. The specific ratings are copyrighted by the individual rating agencies and may not be used or reprinted without a license and/or written permission.
Please consult your financial advisor and relevant offering documents prior to investing any money in these or other products, and for information and additional risks associated with High Yield Corporate Notes, including but not limited to, call risk, principal risk, credit risk and interest rate risk. These products are offered through many but not all broker-dealers.
This information does not constitute an offer to sell or a solicitation of an offer to buy the securities, nor shall there be any sale of those securities, in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful. Product suitability must be determined for each individual investor.