For high-yield bonds, this is often calculated at 50 bps over the benchmark rate.
FORBES: Call Me Maybe? DFS Bond Issue Highlights Make-Whole Refinancing Opportunity
Bonds, particularly high-yield bonds, and dividend stocks have become the go-go investments of the era.
Still, only a small amount of Asian high-yield bonds is available to U.S. buyers.
To put these figures in context, second-lien loans have even printed wide of high-yield bonds.
One way to look at this is to analyze the state of high-yield bonds.
FORBES: Tidal Wave Of Debt Still Guiding U.S. Monetary Policy
Other options might be high-yield bonds, floating-rate debt, cash, commodities, or real-estate income producing properties.
FORBES: How to Protect Your Portfolio from Rising Interest Rates
Moreover, the correlation between high-yield bonds and stocks has been rising in recent years.
FORBES: Are Your Bond Holdings Raising Your Portfolio's Risk Profile?
Some of these forays, like high-yield bonds and blue chip dividend stocks, have performed well.
The most high-profile case has been Lehman principal-protected notes, which were sold as high-yield bonds.
Originally created to finance debt-heavy acquistions, high-yield bonds are now popular with investors looking for yield.
Returns on leveraged loans have lagged behind those achieved by high-yield bonds this year.
Martin Fridson, of Fridson Investment Advisors, says that the default rate on high-yield bonds may climb to 10%.
ECONOMIST: Consumers and companies may be forced to cut back
Turning from the secondary to the primary, this graph details new-issue volume for both leveraged loans and high-yield bonds.
FORBES: November 2012, European Leveraged Loan Market Analysis
If the weakness in high-yield bonds is a leading indicator of recession, it is certainly forecasting fast and furious.
However, history tells us that various bonds, say high-yield bonds, Treasuries or Investment Grade Corporates, tend to move together.
FORBES: Playing The Big Bond Meltdown Without Getting Burned
My take is that its high-yield bonds may not stay junky for long.
In the CCC rating category, for instance, second-liens have cleared at 11.03% since Sept. 1, versus 8.92% for high-yield bonds.
The big picture in 1989, besides high prices, was that the regulators were beginning to ban investments in high-yield bonds.
Lately pundits are shouting from their megaphones that high-yield bonds are overvalued and the bond bubble is ready to burst.
He backed raiders who mounted takeovers that substituted debt for equity, and he supplied investors with the high-yield bonds they wanted.
Corporate-bond investors want assets that are least sensitive to rate rises, and shorter-dated high-yield bonds are the sweet spot, he said.
When I spoke of the soundness and integrity of capital markets, I was referring to a lot more than high-yield bonds.
Asset allocation: What percentage of your total portfolio will you allocate to U.S. equities, international stocks, U.S. bonds, high-yield bonds, etc.
Informal lenders will henceforth need to be registered, more private capital will be encouraged and the issuance of high-yield bonds approved.
ECONOMIST: Wenzhou��s shadow banking system has taken a knock
This graph details new-issue volume for both leveraged loans and high-yield bonds.
Equity and high-yield bonds respond to some of the same macroeconomic factors.
FORBES: Are Your Bond Holdings Raising Your Portfolio's Risk Profile?
However, the current environment (dominated by improving credit conditions and low expected default) makes high-yield bonds generally more attractive than many investors realize.
In 2013, I expect equities to outperform most asset classes given their attractive relative valuations versus cash, U.S. Treasurys, corporate and high-yield bonds.
Given that defaults have been high and recovery rates low, it is surprising that high-yield bonds have earned positive returns so far this year.
应用推荐