You can typically classify bonds into 3 types: government/sovereign bonds, institutional-grade corporate bonds, or junk bonds.   Government / Sovereign Bonds As the name implies, government/sovereign bonds are issued by government and sovereign bodies. For example, Singapore Government Securities or the U.S. Treasury. Backed by the full reputation of the government, such bonds are widely traded and are typically regarded as risk-free. As such, they usually have the highest credit ratings and the lowest yields among bonds, making them a good defensive asset for investors with the lowest risk tolerances. Junk Bonds At the other end of the risk spectrum are junk bonds. These are bonds issued by companies which are rated as less creditworthy, or otherwise not rated at all. In other words, these companies have a higher risk of default. Consequently, these bonds will usually offer higher yields to compensate investors for their risk. Institutional-Grade Corporate Bonds Institutional-grade corporate bonds sit nicely in the middle of the spectrum, offering great risk-adjusted returns. Institutional-grade (IG) bonds are rated by established rating firms (such at Moody’s, S&P & Fitch) for their creditworthiness, and only the top issuers get the IG grade. They offer a good balance between yield and risk, and are a great addition to any investment portfolios.