To attract buyers to these risky bonds, interest rates attached to the debt have increased significantly in recent weeks.

A sinking fund makes the bond less risky, and therefore gives it a smaller "coupon" (or interest payment).

Investors showed a distinct aversion to risky bonds promising high yields.

As investors rush into riskier bonds, their prices rise and yields decline.

Fund managers can bolster the yield on a portfolio by buying riskier bonds.

If you don't fear a recession or the possibility of defaults, there is no reason to buy Treasuries instead of more risky bonds.

Little additional yield is available to those who buy very risky bonds.

In this case, an investor has no incentive to buy the riskier second bond.

But by offering to pay an interest rate more than 5% the firm gives investors an incentive to buy a riskier bond.

As a result, banks that hold risky sovereign bonds are desperately trying to cut their exposure.