A bond rated below investment grade at the time of purchase (below BBB for bonds rated by Moody’s and below Baa for bonds rated by Standard and Poor’s). The finances of the firm issuing them are regarded as so insecure that there is serious doubt as to whether the interest and redemption payments promised will actually be made. Junk bonds are thus risky to hold, and lenders will hold them only if the promised returns are high enough to give an acceptable expected rate of return, after allowing for a non-negligible probability of default.