Many different types of companies can end up sub investment grade. Therefore, it is not a surprise that many of their financing needs are similar to investment grade companies. One major use of high-yield debt funding is acquisition finance. This can be one company buying the stock or assets of another company for strategic purposes. We also think of high yield debt as being synonymous with the sponsor driven transaction such as the LBO or leveraged buyout. These are almost always sub investment grade due to the high levels of debt used. Sponsors will also add on to an initial buyout with subsequent acquisitions using even more debt. Companies will also issue debt to fund the internal growth of the business, buying assets, building out infrastructure, et cetera. Companies can also use debt to refinance the existing capital structure. This is often done to lower borrowing rates as well as finance share repurchases or dividends to equity investors. Lastly, companies will also seek debt financing to finance the day-to-day operations of buying inventory and paying suppliers. This is called working capital.