How deep has James Dondero dipped his toes within the high yield credit industry? Well, let us just say that James Dondero is up to his eyeballs in high yield credit experience. James Dondero has more than 20 years of experience within the high yield credit industry, and as such, has been able to understand the different strategies that will move the needle for his firm and for his investors.
But before we get to know more about James Dondero and what he has done so far with Highland Capital Management, here are few things that you should quite likely know about the financial concept that is high yield credit. Read more about James Dondero at Nexpoint Advisors.
The Concept of High Yield Credit
High yield credit is bonds that are issued by various companies. These bonds are classified as a bit riskier and have a rating that is usually BBB or lower. Remember that these bonds can also be issued by municipalities as well. The great thing about these bonds is the fact that since they carry higher risk, they come with more yield, as such, the more risk that an investor is willing to take on, the more their rewards will be. Read more about James Dondero at Wikipedia.com.
These high yield bonds will typically not carry AAA, AA, or A. BBB is medium credit quality while BB, B, CCC, and so forth are usually found in the junk bond category.
Investors want to choose wisely when they are picking these bonds because they want to make sure that they are able to not only make money on a year to year basis but they are able to also get their initial capital back at the end of the term of the bond. Investors don’t want the company to default and potentially lose their principal.
As such, the higher the credit rating, the lower the yield return, the lower the credit rating, the higher the risk, the higher the yield that one can expect on the capital invested.