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Leveraged Commentary & Data (LCD): High-Yield Bond Primer

2022

Leveraged Commentary & Data (LCD): High-Yield Bond Primer

August 24, 2022

The LCD High-Yield Bond Primer offers a clear and concise guide to the asset class sometimes referred to as “junk bonds.” Since their market boom in the 1980s, high-yield bonds have become increasingly important components of leveraged finance, and alternatively, barometers of the business cycle as interest rates rise and fall. Issuer and investor types are outlined in the primer, as are the various deal structures and facets of bond math. Market dynamics are explained—for example, the shift to floating-rate notes in a rising rate environment. A video link and charts provide additional context.

Table of contents
What is a high-yield bond? 2
Non-investment grade vs investment grade 2
Background - Public versus private 3
What is a junk bond? 3
How big is the high-yield bond market? 3
Market history 4
High-yield bond issuers 4
High-yield bond investors 5
High-yield bond issuance 6
High-yield bond structure 8
Covenants 10
Bond math 11
Registration 12
High-yield bond derivatives 12