High-yield bonds, also known as junk bonds, are debt securities issued by companies or organizations with lower credit ratings. These bonds offer higher interest rates compared to investment-grade bonds to compensate investors for the increased risk of default. Investors are attracted to high-yield bonds for the potential of higher returns. Due to their riskier nature, high-yield bonds are often favored by investors looking for income and willing to accept the possibility of losing some or all of their investment. They can be an important part of a diversified portfolio, especially during periods of economic growth when companies are more likely to perform well.