The most profitable bonds with high coupon income
Bonds remain one of the most popular financial instruments among investors seeking stable income with moderate risk.
Investors are attracted by the predictability of payments, the ability to know the amount and dates of coupon income in advance, and the ability to return the par value upon maturity of the bond.
Income from bonds consists of regular coupon payments and possible profits from reselling the bonds at a higher price.
However, high-coupon bonds often come with increased risks, so it's important to choose issuers wisely, whether they're government or corporate bonds.
Government and corporate bonds: risk or stability?
When choosing between government and corporate bonds, investors must decide whether they are willing to accept increased risk for higher returns or prefer stability with moderate income.
| № | Country | Yield (%) local / USD | Issue currency | Credit rating | Default risk |
|---|---|---|---|---|---|
| 1 | Türkiye | 42 / 9 | TRY / USD | BB– | High (>20%) |
| 2 | Argentina | 40 / 12 | ARS / USD | CCC and below | Extremely high (>30%) |
| 3 | Egypt | 27,5 / 10,6 | EGP / USD | B | High (>15%) |
| 4 | Brazil | 14 / 6,5 | BRL / USD | BB | Moderate (~5%) |
| 5 | New Zealand | 4,5 / — | NZD | AA+ | Very low (<0.5%) |
The most profitable government bonds are issued in emerging economies. Their yields are extremely high, but the risks of default and economic instability are also an order of magnitude higher than in developed countries such as the US or Europe.
It is important to pay attention to the currency in which the government bond is issued, since the exchange rates of national currencies in developing countries often fall.
Unlike government bonds, corporate bonds offer good returns even in US dollars. The highest-yielding corporate bonds (as of July 2025) are:
| № | Issuer / security | Coupon (%) | Yield (YTM %) | Currency | Rating / type | Default risk |
|---|---|---|---|---|---|---|
| 1 | Saturn Oil & Gas – 9.625% 2029 | 9.625 | ≈ 10.35 | USD | No (secured second lien) | Very high (>20%) |
| 2 | Carvana Co. – 14% notes 2031 | 14.0 | ≈ 6-14 (PIK, income depends on execution) | USD | Unrated / PIK | Very high (>20%) |
| 3 | SP Group (India, private issue)** | 0 (zero coupon) | 19.75 (implicit) | INR (repayment in USD equivalent) | Unrated / Private | Very high (>30%) |
| 4 | Other high-yield picks (BondSavvy)** | up to ~11.7 | up to ≈ 11.7 | USD | Junk / recommended. | Very high (>20%) |
| 5 | (other private EM issues)** | ≈ >12 | ≈ 12–15+ | INR / USD / EM nat. | Unrated / private | Extremely high (>30%) |
As for my choice, at one time I bought bonds of the Canadian bank Royal Bank of Canada RY and bonds of the famous Pfizer Inc. Top 10 corporate bonds .
Bond trading on a professional trading platform
The highest-yielding corporate bonds are typically issued by biotech and innovative companies. Their appeal lies in their high coupon income, but they also carry very high default risks, especially if the issuers do not have an investment-grade credit rating.
What else should you pay attention to when choosing bonds?
When investing in high-yield bonds, it's crucial to evaluate not only coupon rates but also the financial strength of the issuers. Key criteria for evaluation include:
Company financial health : Review the company's financial statements, including debt-to-equity ratio, profitability, liquidity, and cash flow stability. High debt levels may indicate a risk of non-payment of coupon payments or the debt itself.
Credit rating : Rating agencies (S&P, Moody's, Fitch) provide an assessment of the issuer's creditworthiness. The lower the rating, the higher the yield, but also the higher the risk of default. In the absence of a rating, as with the biotech companies mentioned above, the risks are particularly high.
Probability of bankruptcy and default : Use metrics such as the Altman coefficient (Z-score) to assess a company's bankruptcy risk. The higher the probability of default, the higher the risk premium reflected in the coupon rate.
When choosing high-coupon bonds, investors must clearly understand the risks involved. Government bonds from emerging markets can offer very high yields, but carry enormous risks of default. Corporate bonds from innovative and biotech companies offer high yields, but require careful analysis and a willingness to accept significant financial losses in the event of default.
The balance between risk and return is a key factor when forming a bond portfolio.
