A bond that carries a significant amount of default risk and therefore is granted low or very low ratings by credit rating agencies. This category of bonds is considered non-investment-grade in the sense that it does not meet normal investment requirements and expectations.

Given their high risk, these bonds are usually issued at higher yields than bonds with lower default risk. On rating scales, non-investment-grade bonds (also, junk bonds) are classified Ba1/BB+ and lower (by Moody’s) or CCC, CC, C, or D (by S&P and Fitch).

These bonds are also known as low-grade bonds.