We’ve Got Your 6 – 6% Yield Bond List
By Dimitri Triantafyllides
May 25, 2016
As developed world central banks keep pushing investors to accept lower and lower rates of return, we have put together a list of corporate bonds with a blended yield of just above 6% which we believe offer value to investors willing to take modest credit risk in order to avoid significant duration (and convexity) risk associated with owning very long term bonds with very low coupons.
The attached list of investment-grade and near-investment grade bonds (blended bond rating of Baa3/BBB-) we believe offers a very attractive yield in today’s rate environment, with a blended yield to worst (YTW) of 6.1% and a z-spread of 472 bps. The highlighted bonds on the list reflect ones that could be owned interchangeably. In the case of the Perry Ellis and Hanesbrands bonds, we offer two ways to gain exposure to the apparel sector, one lower risk and one higher risk. All of the issuers are in our coverage universe and individual company reports can be found at www.sixtyguilders.com.
In making our selections, we chose companies that rate well in our Sixty Guilders Research credit rankings within their industry sector, and have yield/spread characteristics that we believe offer an attractive entry point for the risk category. Furthermore, the list of bonds offers broad industry differentiation and maturity profile. The average maturity of this list is roughly five and a half years. To summarize, we believe this bond list offers attractive yield without compromising credit quality, both as measured by rating agency credit ratings as well our own credit analysis and ranking categories.
As is always the case with corporate bonds, the prices we are using are recent trading levels which may vary materially from future trading levels.
We thank you for your interest and support, and welcome all questions and suggestions.
Dimitri Triantafyllides, CFA
Sixty Guilders Research, LLC
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