New Delhi, Sept. 1 -- High-yield bonds can offer investors higher interest income than highly rated debt securities, but the higher yield comes with greater credit risk. These bonds are issued by companies with lower credit quality, which means investors face a higher risk of credit deterioration and, in some cases, default.

Globally, bonds rated below BBB are generally considered high-yield bonds. In India, investors can also come across relatively higher-yielding opportunities in the AA and A+ segments, without necessarily taking on the level of risk associated with bonds rated below BBB, according to Souvik Biswas, head of research at Bajaj Capital.

Rhishabh Garg, CEO of FundsIndia Digital, said bonds rated BBB and above are consider...