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Would you like to leave a message? akg k 171 mk ii headphones review On one side of the bond spectrum you have investment grade with very low probabilities of default. In the corporate world, these issuers are large companies with steady cash flow and little chance of not being able to make their interest payments each month. On the other side you have high yield with much higher rates of default. While bank loans are closer to high yield bonds in terms of credit risk, they have a unique feature which results in much higher recovery rates. Holders of bank loans are the first group of people to get paid if the borrower goes bankrupt because the loan is backed by company assets. Bank loans get an extra layer of protection not offered by high yield debt because of their seniority in line to get some of their money back.
