What term refers to high yield bonds that are considered lower quality?

The term that refers to high yield bonds that are considered lower quality is indeed non-investment grade. Non-investment grade bonds, often called "junk bonds," are issued by companies or governments that have a higher risk of default compared to those issuing investment grade bonds. Because of this increased risk, they offer higher yields to attract investors seeking greater returns.

These bonds fall below the minimum rating assigned by credit rating agencies, indicating that they do not meet the higher standards of creditworthiness associated with investment-grade bonds. This risk is what makes them attractive to certain investors, as they may seek the potential for greater returns despite the higher likelihood of default.

Investment grade, on the other hand, refers to bonds that have a lower risk of default and typically yield less because they are perceived as safer investments. Convertible bonds are a specific type of bond that can be converted into a predetermined number of the company's shares, while corporate bonds simply refer to any bond issued by a corporation and can be both investment grade and non-investment grade. Therefore, the correct focus on non-investment grade captures the essence of high yield bonds that come with greater risk.