Junk bonds are bonds that carry a higher yield (interest rate) because they are riskier investments. Traditionally, junk bonds were riskier because they were the bonds of corporations that were struggling and that people feared might go bankrupt. In the 1980s, though, Michael Milken pioneered the use of junk bonds in financing takeovers and mergers. In this case, the bonds were junk because those who bought these bonds would have to wait in line behind the holders of what's called "senior debt," which was primarily bank loans. Finally, junk bonds were also used to raise capital for companies whose credit ratings were less than ideal. Junk bonds in this form were no different from normal corporate bonds, except for the fact that they carried a higher interest rate to reflect the greater risk of default.