Some Junk Bonds Look Safer Than Stocks By Holmes Osborne About this article: High-yield bonds are offering attractive yields when compared with other interest-bearing bonds. Many high-yield funds are offering yields of more than 10% and are vastly outperforming comparable T-bonds, which yield about 3%. To review, a high-yield bond by definition is any corporate bond that has a rating of BB or lower. BBB and A or higher are investment-grade ratings. High-yield bonds are also known as junk bonds because of their higher default rates. As noted in an article on preferred stocks, there is a hierarchy in case of a bankruptcy: bank debt, senior debt, junior debt, accounts payable, preferred stock and then common stock. In bankruptcy court, usually the senior debt holders and junior debt holders fight over the value of assets. Let's pretend that a company goes into bankruptcy, and its main asset is a factory that's worth about $300 million. Let's also assume that the face... Or, call us at 1-866-321-TSCM (8726) Monday-Friday, 8 a.m.-6 p.m. ET. Outside the U.S. and in Canada, call 1-212-321-5200.

If you choose a 14-day free trial of RealMoney and you do NOT call to cancel within those 14 days, you will pay $129.95 — a $100 savings off the regular annual subscription price of $229.95. Unless you cancel before the end of that year, your subscription will automatically renew for another year at the then-current subscription price.

Offer applies only to new annual subscriptions, and is subject to change at any time. Void where prohibited.

If you choose a monthly subscription, you pay $34.95 per month. You will be notified if the current monthly rate of $34.95 changes at any time in the future.

TheStreet.com is a publisher. None of the contributors or their affiliates will provide you with personally tailored advice concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. From time to time, any or all of the contributors or their affiliates may hold positions in securities mentioned and they may trade for their own accounts. In cases where the position is held at the time of publication, appropriate disclosure is made.

© TheStreet.com, Inc., 14 Wall Street, 15th Floor, New York, NY 10005.