Editing High-yield debt (section)

==Default risk==
As indicated by their lower [[credit rating]]s, high-yield debt entails more risk to the investor compared to [[investment grade]] bonds. Investors require a greater [[Yield (finance)|yield]] to compensate them for investing in the riskier securities.<ref>{{cite book |last= Fabozzi|first= Frank J. |title=The Handbook of Fixed Income Securities |date=1997 |publisher=[[McGraw Hill]] |location=New York |isbn=0-7863-1095-2 |pages=220–221 |edition=fifth}}</ref>

In the case of high-yield bonds, the risk is largely that of default: the possibility that the issuer will be unable to make scheduled interest and principal payments in a timely manner.<ref name="thau2000">{{cite book |last=Thau |first=Annette |title=The Bond Book |date=2 November 2000 |publisher=McGraw-Hill |location=New York |isbn=0-07-135862-5}}</ref><sup>:208</sup> The default rate in the high-yield sector of the U.S. bond market has averaged about 5% over the long term. During the liquidity crisis of 1989–90, the default rate was in the 5.6% to 7% range. During the [[COVID-19 pandemic]], default rates rose to just under 9%.<ref name="economist">{{cite news |title=America's high-yield debt is on ever-shakier foundations |url=https://www.economist.com/finance-and-economics/2021/06/17/americas-high-yield-debt-is-on-ever-shakier-foundations |newspaper=The Economist |access-date=1 July 2021}}</ref><ref name="thau2000" /><sup>:209</sup> A [[recession]] and accompanying weakening of business conditions tends to increase the possibility of default in the high-yield bond sector.{{Citation needed|reason=statement\paragraph should be supported by citation to a reliable source. See [[Wikipedia:Reliable sources]]| date=July 2021}}