2. Cooperate Bonds: Corporate securities can offer higher yields, but they are also among the riskiest bonds, because they are backed only by a company’s promise to pay. Interest on corporate bonds is fully taxable. Corporate bonds are generally categorized into two broad groups: investment grade and high-yield. Investment-grade bonds have ratings of Baa and above from Moody’s Investors Service and BBB and above from Standard & Poor’s. High-yield bonds are considered to have a greater risk of default than their investment-grade counterparts. Indeed, they are often called “junk bonds.”
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