10-11% interest rate: Take a look at the top 10 high-yielding bonds

High-yield bonds are issued by corporate organizations and carry substantial risk as the credit ratings are predominantly lower than investment-grade corporations. Companies pay a higher rate of interest on high-yield bonds in India, as the default rate for high-yield bonds or junk bonds is higher when compared to investment-grade bonds with high credit ratings.

As a result, they typically issue bonds with higher interest rates in order to entice investors and compensate them for this higher risk.

The ratings for high-yield bonds are given by S&P and Moody’s. "The ratings for high yield bonds are BBB ranked by Standard and Poor, and Ba3 ranked by Moody’s. The probability of these high-yield bonds or junk bonds defaulting is high due to incessant price fluctuations. Though high-yield bonds are the same as corporate bonds for debt repayment along with interest after a period, the credit rating makes a difference," said IIFL.

 

Some investors with a greater risk tolerance may find high-yield corporate bonds attractive, particularly in low-interest-rate environments. 

Point to note: When it comes to high-yield bonds, the default rate is higher than other traditional bonds with high credit ratings. Plus, these bonds carry higher interest rate risk compared to equities.

Here are the top high-yielding bonds in India right now, as per Indiabonds.com

Investors seeking higher yields than those offered by traditional investments should consider exploring the opportunities available in high-yield corporate bonds but it is important for investors to carefully review all relevant offer documents and rating rationale before making such a decision.