It is safe to buy high yield bonds?

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dark_armies

It is safe to buy high yield bonds?

it is safe to buy high yield bonds from the U.S. goverment? i thought high yield bonds are only offer when the issuer don't have much credibility so he/she raise the interest rate to attract investor. therefore, why does the U.S. government offer high yield bonds to investor when their credibility is already good?

someone who knows

The U.S. government does not issue high yield bonds. U.S. government bonds are the safest investment and maintain the highest credit rating.

Regarding corporate high yield debt, that really depends if you're willing to accept certain risks - are you talking a diversified high yield mutual fund or high yield debt for a specific firm? If for a firm, what's the company's cash profile? How is the business outlook? What do analysts say? Essentially - can they make debt payments?

High yield portfolio worth it? That depends on your risk appetite and view of the outlook on the credit markets. You could take losses and firms could go belly-up. Thoughts on the economy? Etc.

jeff410

You may be thinking of something like GNMA's. I wouldnt call them high yield. Its better than treasuries. They pay a pretty good monthly dividend. And they arent very volatile. These are mortgages guaranteed by the U. S. Government. The mortgage payments are guaranteed. There is a risk if people pay off their mortgages early or if rates drop. They arent directly connected to the sub-prime mortgages. But a collapse in the overall real estate market will have some effect.

jonas_grant

The US govt for the reasons you cited does not offer high yield bonds.

The greater the chance of default, the higher the risk and therefore the greater the return needed to entice buyers.

US govt bonds are considered risk free - when the world ends, the USA won't repay, until then, it's good for it (after all, they can always print some more money!).

kyle

The U.S. Govt. issues ultra safe low yield bonds. You're looking for less than investment grade corporates. No they are not 100% safe. I wouldn't buy anything below a single 'A' rating. These generally would yield about 6%. Be happy with that or buy stock.

Tim B

I know someone who invested in "high" yield bonds.. only to have the bond issuer file for bankruptcy protection.

Hint: a fool and their money soon go their seperate ways.

Be carefull.

Laissez-Faire Guy

The US government offers high yield bonds? Like what?

I thought the most they paid was like 5% or so.

Frank Castle

The United States of America only offers VERY LOW YIELD BONDS.

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