The phrases sound similar, but a high-yield bond and a private promissory note are different instruments with very different protections. If you are weighing an income investment, this distinction matters more than the headline yield.
A high-yield bond is corporate debt rated below investment grade. It is issued into a regulated market: it is registered (or sold under established rules such as 144A), rated by credit agencies, priced continuously by the market, and usually sellable on a secondary market. Most retail investors hold them through mutual funds or ETFs. The risks are real — issuers can default — but the instrument comes with ratings, pricing transparency, and disclosure.
A private promissory note is a direct promise by an issuer to repay you with interest. It is typically unregistered (sold under an exemption like Rule 506(c)), unrated, illiquid (no secondary market), and often unsecured. There is no agency grading the credit and no market pricing it — you are relying on the issuer’s own disclosures and its ability to pay.
| High-yield bonds | Private promissory notes | |
|---|---|---|
| Registration | SEC-registered or issued under 144A | Unregistered; sold under a private exemption |
| Credit rating | Rated by agencies (e.g. BB, B, CCC) | Unrated |
| Liquidity | Secondary market; can usually be sold | Illiquid; typically held to maturity |
| Pricing | Market-priced daily | Set by the issuer |
| Disclosure | Registered-offering / ongoing disclosure | Private; limited, per offering documents |
| Who can buy | Broadly, often via funds | Verified accredited investors only |
| Insurance | None (not FDIC insured) | None (not FDIC insured) |
Marketing sometimes blurs these two, because “high-yield bond” sounds established and familiar. Do not let the label do the work: a private note is not a bond, and calling a note “bond-like” does not give it a rating, a market, or a bond’s protections. If anything, a private note usually carries more risk than a high-yield bond, not less.
Unambiguously the second. Oaktower Capital issues private promissory notes — not high-yield bonds. Our notes are unregistered, unrated, unsecured, and illiquid, and their coupon depends on a high-risk 0DTE options strategy that can lose money. We tell you this plainly because an informed investor is the only kind we want. Start with the risk disclosures.