Why I Like High Yield Bonds

In: Business and Management

Submitted By dlcell
Words 314
Pages 2
Why I like High Yields Bonds 1. Defaults LOW-now & and in the forseeable future are not a significant factor: * Fundamentals-reduced expenses, reducing debt(deleveraging), Diluting stock holders to raise capital-beautiful environment to service debt. “Companies are not expanding they are maintaining” “We have one the best credit quality periods in the HY space U.S. History”

2. Liquidity controlled-Keeping maturities shorter- Having the ability to move out of positions more easily is controlled by shorter maturities. This also helps reduce the effect of interest rate hikes. “We like modest inflation because of our shorter duration-as bonds roll off we can reinvest at better yields” 3. More predictable returns with reduced volatility: * Promise to pay * Increased claims right on company(better than stock, preferreds)-Have been increasing our senior secured positions.-now @35% * In Jan. 2004 the HY prices were a few percent higher on the index than they are now and the return on the index(Merrill Lynch HY Master) in 2004 was 10.76%. * In the last 25 years the index has had 20 positive years and only 5 negative. With a 25 year period return of over 9% * From 1992 thru Jan 1 2009 the standard deviation of HY bonds has been ½ of the SD of the S&P 500(source factset) 4. Non-coorelation to U.S. Treasury * As interest rate rise treasury prices increase and yield declines-our shorter term portfolio enjoy the strength of a growing market and modest inflation. 5. Misc… * Avoid HY bond mutual funds as the ability to hold onto bonds by the manager is often dictated by the outflow of money from the fund(redemptions). * Avoid HY funds as a hugh influx of cash my cause the managers to purchase less than desirable bonds to fully allocate the portfolio (reduce the credit quality of the…...

Similar Documents

Bond Yields

...Bond Yields Interest rates have a big part in determining the yield of a bond. If interest rates rise, the bond will be worth less and if they fall bonds will be worth more. The Yield to Maturity or YTM is the rate of return the lender or borrower will earn if the bond is not sold before its maturity. It can be also referred to as the bond`s yield. In order to be able to calculate the Yield to Maturity, some of the things you would need to know are the current price, the par value, the interest payments, and the maturity date for the bond. A coupon is the stated interest payment made on a bond. The market value will be less than par value if the required rate of return is above the coupon interest rate. Bond will be valued above pay value if the required rate of return is below the coupon interest rate. Also, the lower the coupon rate the greater the interest rate risk. Interest rate risk refers to the risk of fluctuating interest rates. In other words, bond values have an inverse relationship to interest rates. Long-term bonds will have a greater interest rate risk than short-term bonds. Interest rates have a greater impact on long-term bonds because it takes longer for them to mature. Typically, the more you can earn from a bond the more risk there is to it. However, the more risk there is to a bond the more likely either the borrower might default. Bonds have a rating system which gives them a rating based on the......

Words: 1045 - Pages: 5

Why I?

...Why I love fashion At an early age wool, cotton, linen, and silk have been always a part of me. Not much has changed since that time except for the fact that I have grown to love and appreciate what goes on behind the scenes in the fashion industry. I simply dress to have amusement to my existence. As Bill Cunningham described in his wonderful documentary "Fashion is our suit of armor to survive every day life. It would be like doing away with civilization." I was confused on whether to engage my life to the fashion industry being such a competitive job. I believe that fashion has pushed me out of my comfort zone to try things I never would have imagined I would. What keeps me passionate about the fashion world is the freedom and creative expression one gets. You can express yourself and maybe people will listen or respond. If I see someone with a great pair of shoes on (for example), I may go up to them and tell them and we strike up a conversation and perhaps we become friends. This isn't always the case but it is more likely since you started with a mutual interest. I knew I could start making the world pretty one girl at a time! Fashions is art that we wear every day and live our lives in. Unless you live in a nudist colony, clothes are something that we must wear every day. The beauty of that is that through clothing we have the opportunity to express a part of our personalities and ourselves. I love beautiful and functional design of all types whether it be......

Words: 1129 - Pages: 5

Why I Like Eagle

...Why eagles are popular Everyone knows what an eagle is. It is a strong, brave, agile, independent, and tough bird. Over 30 countries have chosen this animal as a symbol of their country. Governments, companies and people feel that this animal of prey`s positive characteristics are their qualities, too. Many people have used eagles to represent a variety of institution, such as government or country. Eagles are popular in many countries, even ancient Rome used it. Some countries even consider the eagle as a sacred bird, strong, and powerful. The eagle is often used as a symbol of government departments, military forces, or even as the symbol of the country itself. It is used with many interpretations, but surely, all departments or even countries which use an eagle as their symbols expect their departments or countries to have the power. The second category is organization or company. Most organizations which choose eagle as their logo do so because of the many positive characters of this bird. For example, the eagle represents power, and most organizations expect their organizations to be strong and powerful and flying fast. Those are the dreams of creators who choose an eagle as the symbol of their organization. The last category is the individual. For many people, mostly men, choosing eagles as their favorite animals is based on their fondness for the physical qualities of the bird, like their swiftness......

Words: 353 - Pages: 2

Bond Yield Measures

...MEASURES OF YIELD In order to be able to exhaust the measures of yield, the following terms will be of great essence in helping maximum elaboration of the measures. Coupon: The interest payment sent to the owner of an individual bond, usually twice a year. The coupon rate is the interest rate the issuer promises to pay to the investor. For fixed-income investments, this rate is fixed at the time a bond is issued and doesn't change.   Market interest rates: The prevailing interest rates in the bond markets on any particular day. These rates change based on the economy, policies and other factors. There is no single market interest rate. The rates will vary based on the time to maturity for a particular bond, the credit quality of the issuer and other factors. Market price: The current value of an existing bond if you wanted to sell. This is the price you'd see on your quarterly statements. Market prices can be above (or at a premium to) the par value, or below (at a discount to) the par value, depending on current market interest rates, the promised coupon rate and other conditions. Maturity: The date that a bond's par (face) value is repaid and interest payments stop. The longer the time to maturity, generally, the higher the interest rate will be—but the higher the risk of a bond's price falling, as well, if market interest rates increase. As time passes and the maturity date approaches, the impact of interest rates declines. The price of a bond, if trading...

Words: 1958 - Pages: 8

Bond Price Yields Ch10

...Chapter 10 Bond Prices and Yields Catastrophe bond: Typically issued by an insurance company. They are similar to an insurance policy in that the investor receives coupons and par value, but takes a loss in part or all of the principal if a major insurance claim is filed against the issuer. This is provided in exchange for higher than normal coupons. Eurobond: They are bonds issued in the currency of one country but sold in other national markets. Zero-coupon bond: Zero-coupon bonds are bonds that pay no coupons but do pay a par value at maturity. Samurai bond: Yen-denominated bonds sold in Japan by non-Japanese issuers are called Samurai bonds. Junk bond: Those rated BBB or above (S&P, Fitch) or Baa and above (Moody’s) are considered investment grade bonds, while lower-rated bonds are classified as speculative grade or junk bonds. Convertible bond: Convertible bonds may be exchanged, at the bondholder’s discretion, for a specified number of shares of stock. Convertible bondholders “pay” for this option by accepting a lower coupon rate on the security. Serial bond: A serial bond is an issue in which the firm sells bonds with staggered maturity dates. As bonds mature sequentially, the principal repayment burden for the firm is spread over time just as it is with a sinking fund. Serial bonds do not include call provisions. Equipment obligation bond: A bond that is issued with specific equipment pledged as collateral against the......

Words: 4544 - Pages: 19

I Like Nutella

...WHO AM I? “Live life for the moment because everything else is uncertain” ~Louis Tomlinson Everybody has a different view about the world. Everyone has a different opinion on how people should act and what traits make a person good. Some may consider loyalty, honesty and tolerance to be very important. I agree that these traits are important, but I believe that the most essential trait is to be optimistic. I also think having a sense of humor and a smile is very important.  Voltaire once said “Life is a shipwreck but we must not forget to sing in the lifeboat.” This is one of my favorite quotes. Human existence isn’t flawless; however why we should dwell on imperfections when we can live with smiles with the almost faultless instead. I believe that life is too short to waste on negativity and that we should always look at the bright side of things. A smile is one of the only gestures preformed and understood by everybody in the world; you smile in the same language. It’s a universal welcome. A simple smile has the power to make someone’s day. If you smile at someone they will most likely smile back. Therefore, smile all the time, the whole planet will pretty soon wear a happy grin. I believe that life is very much like a mirror: we get the best results when we smile at it.  To conclude, this is my philosophy of life: Laugh your heart out, think optimistically, and don’t forget to smile. To me, a role model is someone who influences the way I live my life. A role......

Words: 307 - Pages: 2

Yield Bond and Curve

...Yield Curve and Bond Valuation Name: Lecturer: Course: Date: Yield Curve and Bond Valuation Question 1 and 2 Based on the information retrieved from the Board of Governors of the Federal Reserve System on a 1-month business day, the following information concerning historical dairy interest rates on the U.S treasury was obtained. The rates were picked from the current dates (1st January2012) back to five years a go (1st January 2007). Whereby, if that date was not a business date the preceding date was selected as shown in the table below. |Business Date chosen Five Years Ago |1st January 2007 | |1-month Nominal T-bill Rate on that date |5.02% | |3--month Nominal T-bill Rate on that date |4.79% | |6-month Nominal T-bill Rate on that date |5.11% | |1-year Nominal T-note Rate on that Date |5% | |5-year Nominal T-note Rate on that Date |4.68% | |10-year Nominal T-note Rate on that Date ...

Words: 966 - Pages: 4

Why I Like College

...with just a high school diploma, I was not afforded the opportunities for certain jobs. Then, I realized the importance of a college education. Additionally, the quality of my family life will change tremendously. I would be following my dream desires to better my life and knowing that I can actually complete and achieve a goal that I set out for myself. My children will look at me as a role model and want to further their education beyond a high school diploma. As I, strived and worked hard and dedicated myself to my education, I achieved an Associate Degree in Human Resource Management. These fundamentals that were displayed influenced my daughter to further her education and she received two degrees by the age of twenty four. Now my son is putting his foot forward to do the same. Receiving a college education afforded me opportunities to compete within the workforce and be able to gain career jobs. Also I was introduce to manifold of varies educational cultures and career fields. Furthermore, a college education opens numerous opportunities that I did not received with a high school diploma. With a college education you will benefit from high pay salary and benefits that gives you stability in a job. To sustain this factor in a job it is vital to continue to gain new knowledge in today’s society. It is necessary to be in the know with new and revised information. Doing so, you will be able to stay competitive within in the various workforces. Presently, I am pursing a...

Words: 451 - Pages: 2

I Like Monkeys

...them for 5¢ a piece. I thought that odd since they were normally a couple thousand each. I decided not to look a gift horse in the mouth. I bought 200. I like monkeys. I took my 200 monkeys home. I have a big car. I let one drive. His name was Sigmund. He was retarded. In fact, none of them were really bright. They kept punching themselves in their genitals. I laughed. Then they punched my genitals. I stopped laughing. I herded them into my room. They didn't adapt very well to their new environment. They would screech, hurl themselves off of the couch at high speeds and slam into the wall. Although humorous at first, the spectacle lost its novelty halfway into its third hour. Two hours later I found out why all the monkeys were so inexpensive: they all died. No apparent reason. They all just sorta' dropped dead. Kinda' like when you buy a goldfish and it dies five hours later. Damn cheap monkeys. I didn't know what to do. There were 200 dead monkeys lying all over my room, on the bed, in the dresser, hanging from my bookcase. It looked like I had 200 throw rugs. I tried to flush one down the toilet. It didn't work. It got stuck. Then I had one dead, wet monkey and 199 dead, dry monkeys. I tried pretending that they were just stuffed animals. That worked for a while, that is until they began to decompose. It started to smell real bad. I had to pee but there was a dead monkey in the toilet and I didn't want to call the plumber. I was embarrassed. I tried to slow......

Words: 494 - Pages: 2

What Fundamentals Affect the Yield of Bonds in the Singapore Market

...What  fundamentals  affect  the  yield  of  bonds   (Singapore  market)                     By:     G8   Lee  Kang  Wee   Olivia  Tan   Daryle-­‐alexis  Tan   Ho  Guoming               FIIM  FNCE  102   Professor  Huang  Sheng                               Introduction     As   an   international   financial   centre   with   about   11%   of   GDP   from   financial   services,   we   felt   it   would   be   interesting   to   find   out   more   about   the   Singapore   money   market.   Since   the   start   of   the   new   millennium,   Singapore’s   bond   market   has   taken   off   and   has   now   one   of   the   most   developed   bond   markets   in   Asia   with   about  SGD357  billion  in  2011  and  this  number  is  expected  to  grow  further  with  more  and  more  money  flying   into  Asia  from  the  West  due  to  various  economic  situations.  One  area  of  high  growth  is  in  the  Islamic  debt   area.       For   the   purpose   of ......

Words: 3435 - Pages: 14

I Like Trains

...a firsthand account of what it was like to live through The Great Depression. Read this excerpt of John Steinbeck's essay "I Remember the Thirties."Then, answer the following questions based on Steinbeck’s rhetorical strategies. 1. The author says the decade had "a beginning, middle and end." His essay also has this structure. Briefly describe these three sections in Steinbeck's essay.Essentially the beginning, the middle, and the end he refers to are the beginning, middle, and end of the Great Depression. He described lie before the Depression as a writer. During the Depression, he described how tough life was and how writers were hard hit. After the Depression, he described the success he encountered in s his book. 2. What is Steinbeck's attitude towards those who "had it made" at the beginning of the decade? Quote the words or phrases that lead you to this conclusion.Steinbeck’s attitude toward those wo had it made was almost one of pity or somberness. He knew that those who had it made were not on solid footing and that the money they had could go as fast as they received it. What really helped me was “Their eyes had the look you see around the roulette table.” Meaning that they did not know what to expect next and had their hopes penned on something that was not even certain. 3. Steinbeck's use of sensory details provides a vivid description of life during that period. Choose two phrases containing sensory details and discuss why these effectively convey the......

Words: 1042 - Pages: 5

I Like Chahcha

...As my first source of primary research I visited a local design studio named Strawman Creative. This company being one of my more crucial visits as they were currently doing design work for a big beer brand. This interview had intent for me to learn industry processes whilst an input from Jon Groom (man interviewed) on the types I things I should know both about the drinks and branding. Coming away from this I learnt about drinks in general as well as the identity behind them epically with big corporate and independent drink brands. I was also given research tips to look up on including: products that are currently out there and see them in use by visiting stores, see the kind of people buying those drinks and the background of the chosen drink category. When first discussing the identity of drinks I soon learnt that the content really doesn’t matter especially with alcoholic beverages as it sways more to perception and association. When buying drinks Groom told me that even when drinks I brewed in the same brewery but displayed under a different name for one being a cheaper and less stronger known company people will always go for higher more expensive brand as they don’t want to be seen with something cheaper. People not want to be seen with stores own drink because people judge others by the value so people are just paying more for the brand. This is were perception and association comes in were if its seen to be more expensive and a higher tier of quality and......

Words: 1358 - Pages: 6

I Like Tech

... | | | | |= $56.37 |+ Tc × Debt |Challenging to |Unobservable | | | |0.4 × ($3,000) |observe | | |$61.53 |= $56.37 |+ $1,200 or |? |? | | | |+ $5.16/sh | | | The effect of the present value of debt tax shields: It shows that adding $3 billion in debt to Wrigley’s capitalization and returning a like amount to shareholders will add $1.2 billion in equity value due to tax effects. The tax benefits are estimated assuming that Wrigley commits to maintain the $3 billion in debt in perpetuity. The net revised value per Wrigley share is $61.53. Debt grows from zero to $3 billion. Assets grow by $1.2 billion, equal to the present value of the debt tax shields. 2b. Book equity becomes negative as a result of the large payout under the dividend or share repurchase. Market value of equity declines by $1.8 billion, the result of the payout of $3 billion, which is offset by the benefit of the debt tax shields ($1.2 billion). Note that the accounting values give no attention to the value of debt tax shields and to the possibility that the......

Words: 2128 - Pages: 9

Yield Bond

...MEASURING YIELD CHAPTER SUMMARY In Chapter 2 we showed how to determine the price of a bond, and we described the relationship between price and yield. In this chapter we discuss various yield measures and their meaning for evaluating the relative attractiveness of a bond. We begin with an explanation of how to compute the yield on any investment. COMPUTING THE YIELD OR INTERNAL RATE OF RETURN ON ANY INVESTMENT The yield on any investment is the interest rate that will make the present value of the cash flows from the investment equal to the price (or cost) of the investment. Mathematically, the yield on any investment, y, is the interest rate that satisfies the equation. ------------------------------------------------- P = ------------------------------------------------- ------------------------------------------------- where CFt = cash flow in year t, P = price of the investment, N = number of years. The yield calculated from this relationship is also called the internal rate of return. ------------------------------------------------- ------------------------------------------------- Solving for the yield (y) requires a trial-and-error (iterative) procedure. The objective is to find the yield that will make the present value of the cash flows equal to the price. Keep in mind that the yield computed is the yield for the period. That is, if the cash flows are semiannual, the yield is a semiannual yield. If the cash flows are monthly, the......

Words: 9863 - Pages: 40

Why I Like You Lyric

... 오늘 아침 그대 아주 맑은 목소리는 I do I do I do yeah- 날 완벽하게, 내가 살아가게, 나를 웃게 하는 단 하나의 이유 yeah- 그대가 있다는 것 yeah- *그대가 그대가 난 그대가 “사랑해 사랑해 널 사랑해” 라고 말할 때 나를 믿게 돼 그대가 그대가 난 그대가 가만히 가만히 내 눈을 보며 웃을 때 나도 웃게 돼 니가 좋은 이유 많고 많은 사람들 나를 몰라줘도 어깨를 쫙 펴게 더 자신있게 해줄 나의 단 한 사람 사랑하는 내 사람 My U My U My U yeah- 처음보다 좀더, 어제보다 좀더, 오늘은 더 그대를 더 사랑하게 된 이유 girl- 우리 둘의 비밀 yeah- *그대가 그대가 난 그대가 “사랑해 사랑해 널 사랑해” 라고 말할 때 나를 믿게 돼 그대가 그대가 난 그대가 내옆에 내옆에 다가와 내게 기댈 때 힘을 얻게 돼 다정한 미소, 섹시한 눈빛, 엉뚱한 얘기 날씨 바뀌듯 때론 짐작도 할 수 없어 yeah- 있는 그대로 꾸미지 않는 사랑스러운 나의 그대가 너야, 나의 그대가 너야 yeah- *그대가 그대가 난 그대가 “사랑해 사랑해 널 사랑해” 라고 말할 때 나를 믿게 돼 그대가 그대가 난 그대가 가만히 가만히 내 눈을 보며 웃을 때 나도 웃게 돼 니가 좋은 이유 그대가 그대가 난 그대가 “사랑해 사랑해 널 사랑해” 라고 말할 때 나를 믿게 돼 그대가 그대가 난 그대가 내옆에 내옆에 다가와 내게 기댈 때 힘을 얻게 돼 니가 좋은 이유 ==========TRANSLATION========== even though when i turn on the TV i hear news of the world that makes my shoulders droop and gloomy your very clear voice this morning.. i do i do i do yeah~ the one reason that makes me perfect, makes me live, makes me laugh is having you, yeah~ you you, when you say "love you love you, i love you" you make me......

Words: 869 - Pages: 4

転生したらショタ勇者だった件 2 | Hunter x Hunter The Last Mission Sub Indo Lengkap | Hair Extensions Straight Halo Headband Invisible Wire Hidden Secret 22 140g