What are high-yielding bonds and what to look for before investing in them?

economictimes.indiatimes.com:

Arnav Pandya, Founder, Moneyeduschool, says “while investing in high yield bonds, one has to look at the kind of pedigree that it has, who are the promoters, what is their inclination towards the business. All these kinds of things are very important when you go and invest in a particular bond issued by a particular entity. Do not just look at the yields and the returns because that might give you a misleading picture.”
What are high-yielding bonds where even now there are double-digit returns that an investor can earn?
There are various types of bonds which are issued by different entities and these are traded in the secondary markets also. So, you have a simple kind of bond which can be an infrastructure bond, you can have tax-free bonds where the interest on them is tax-free and there are also several bonds where the yields are higher.
Now, the high yields can be due to many factors. One of them could be that overall as the cost of funds in the economy go up, you will find that several of these bonds have a slightly higher yield and because that there is a risk involved in these bonds, which is there is a credit risk involved, you will find that the rates that these bonds offer are higher than what you see with various other kinds of bonds and debentures which are issued by some other entities which are able to raise funds at an easier rate.

Unlock Leadership Excellence with a Range of CXO Courses

The second thing is also that for many of these entities, it is an inability to raise cheaper funds because they do not have