The earnings rate for Series I Savings Bonds is a combination of a fixedrate, which applies for the life of the bond, and the semiannual inflation rate.
For one thing, it is hard to know how much companies have in fact lengthened the maturity of their debts because the interest-rate swap market allows them to swap those fixedbond payments into cheaper floating debt, a popular strategy in the investment-grade market.
Another reason demand for the long bond has been so voracious is that a lot of investment banks still use them to hedge their corporate-bond positions and interest-rate swaps (between fixed- and floating-rate obligations).
With bond yields rising since the Fed announced QE2, 30-year fixedrate mortgage interest rates went up to their highest level since the week of September 30 to 4.46%.
Unlike traditional bonds, SIBs do not have a fixedrate of return as financial return depends on the achievement of specific social outcomes set at the start of the bond issue.