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Yield-to-worst in junk bond market hits record low
Mar 13, 2013
March 13 (IFR) - The yield-to-worst in the US high-yield bond market has fallen to a record low average of 5.56% this week, as investors flock to higher-yielding but riskier products.
With interest rates hovering around record lows, investors have found themselves rushing down the credit ladder in search of bonds offering more return - and more risk.
CCC rated bonds - the riskiest investments at the very bottom of the credit spectrum, just one notch above default level - have rallied the most.
"It's definitely risk-on behavior, where you are trying to get exposure to the most yield possible," said Drew Mogavero, head of US high-yield trading at Barclays.
"The safer segments of the market, BBs, have rallied to pretty low-yielding levels," he said. "So people are looking out to CCCs and other higher-yielding names."
Bond yields and prices move in opposite directions. As investor demand has driven up prices, yields have tumbled. Yield-to-worst indicates the lowest potential yield on a bond without the issuer defaulting.
Lower All Over
Broken down by ratings, the yield-to-worst on the Barclays Double B index is also at its lowest ever (4.24%), as is the level on the Triple C index (7.43%).
The only segment of the market that didn't close at a record low on Tuesday was the Single B index, which is 5.46% versus the record low of 5.39% set on January 24
Chris Martenson Warns "Market Risks Today Are Higher than Ever" | Zero Hedge
Yield-to-worst in junk bond market hits record low
Mar 13, 2013
March 13 (IFR) - The yield-to-worst in the US high-yield bond market has fallen to a record low average of 5.56% this week, as investors flock to higher-yielding but riskier products.
With interest rates hovering around record lows, investors have found themselves rushing down the credit ladder in search of bonds offering more return - and more risk.
CCC rated bonds - the riskiest investments at the very bottom of the credit spectrum, just one notch above default level - have rallied the most.
"It's definitely risk-on behavior, where you are trying to get exposure to the most yield possible," said Drew Mogavero, head of US high-yield trading at Barclays.
"The safer segments of the market, BBs, have rallied to pretty low-yielding levels," he said. "So people are looking out to CCCs and other higher-yielding names."
Bond yields and prices move in opposite directions. As investor demand has driven up prices, yields have tumbled. Yield-to-worst indicates the lowest potential yield on a bond without the issuer defaulting.
Lower All Over
Broken down by ratings, the yield-to-worst on the Barclays Double B index is also at its lowest ever (4.24%), as is the level on the Triple C index (7.43%).
The only segment of the market that didn't close at a record low on Tuesday was the Single B index, which is 5.46% versus the record low of 5.39% set on January 24
Chris Martenson Warns "Market Risks Today Are Higher than Ever" | Zero Hedge
Devono rifinanziarsi. Ma con questo bilancio e con queste prospettive, nessuna banca riesce ad andargli incontro. Quindi: o cacciano i soldi i soci (ricapitalizzano) o riducono il debito. In entrambi i casi, chiederanno un sacrificio agli aobbligazionisti (allungamento scadenze, haircut sugli interessi, ecc.)
