For high-yield bonds, this is often calculated at 50 bps over the benchmark rate.
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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.
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Other options might be high-yield bonds, floating-rate debt, cash, commodities, or real-estate income producing properties.
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Alternative scenarios are especially pertinent in evaluating the current outlook for high yield bonds.
Moreover, the correlation between high-yield bonds and stocks has been rising in recent years.
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Yet, emerging market and high yield bonds in general have underperformed safety all year.
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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.
This suggests that stocks may be attractive investment opportunities versus even high yield bonds.
High yield bonds work to pick up the slack created by anemic Treasury returns.
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.
The ugly junk bonds of old have now become the more palatable high yield bonds of today.
High yield bonds and senior floating rate loans have performed quite well over the past four years.
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Even when the details of credit default swaps and high yield bonds lead to fits of sudden-onset narcolepsy!
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In short, the yield on high yield bonds is not low because investors are inadequately compensated for risk.
High yield bonds, plus 1 percent, seem on track to earn their coupon (6 percent) but little more.
Martin Fridson, of Fridson Investment Advisors, says that the default rate on high-yield bonds may climb to 10%.
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Additionally, many mutual funds have been forced to sell their high quality, high yield bonds because of redemptions.
There are attractive opportunities in both high yield loans and high yield bonds and the details really do matter.
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Turning from the secondary to the primary, this graph details new-issue volume for both leveraged loans and high-yield bonds.
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Taking this distortion to yet another level, compared to high yield bonds, blue-chip, high quality stocks look incredibly cheap!
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Areas to avoid include longer-term sovereign and municipal credit and high yield bonds.
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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.
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The financing window for high yield bonds, even CCC credits, is wide open.
My take is that its high-yield bonds may not stay junky for long.
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