Junk bonds are bonds that carry a higher risk of default than most bonds issued by corporations and governments. A bond is a debt or promises to pay investors interest payments along with the return of invested principal in exchange for buying the bond. Junk bonds represent bonds issued by companies that are financially struggling and have a high risk of defaulting or not paying their interest payments or repaying the principal to investors.
Junk bonds are also called high-yield bonds since the higher yield is needed to help offset any risk of default.
A high-yield, or "junk" bond is very similar to regular corporate bonds. Both represent debt issued by a firm with the promise to pay interest and to return the principal at maturity. Junk bonds differ because of their issuers' poorer credit quality

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