Speculative Grade Bonds

Receive potential higher yield by investing in these speculative grade bonds which typically carry a higher risk of default compared to investment grade bonds.

Speculative Grade bonds (also known as High Yield bonds) are those rated BB+ and below by Standard & Poor’s (S&P) or Fitch and Ba1 and below by Moody’s. These credit-rating agencies assess the credit risk of the issuer of the bonds, and assign them a credit rating based on information available at the time. Credit risk rating represents the agencies’ opinion on the possibility that the bond issuer may fail to pay what is owed. In some cases, the bonds may not even be rated by any rating agency.

Key Features

• Receive the principal value of the bond upon maturity or when the bond is called by the issuer.
• The investors are subject to higher credit risk. High-Yield Bonds/debentures are typically rated below investment grade or are unrated and as such are often subject to a higher risk of issuer default.
• The High Yield bonds are subject to higher vulnerability to economic cycles. High-yield Bonds/debentures typically fall more in value than investment grade Bonds/debentures during economic downturns as (i) investors become more risk averse and (ii) default risk rises.

These products are only recommended for investors with an appropriate risk appetite, financial situation, experience and objectives as they carry significant risks. Investors are exposed to the issuer's credit risk and market risks.

The product may not be suitable for all types of investors. For more information on the features, benefits and risks of this type of investment, please contact your Relationship Manager.