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| BondsOnline.com: instant access to and extensive coverage of over 3.5 million stocks, bonds, indexes and other securities covering major and emerging markets and exchanges across the globe. |
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| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
|---|
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S&P National Bond Index
|
3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
|
0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| More |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
|
1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Debt-Free Firms Have The Edge With Rates Going Up |
Forbes - April 27, 2011 - By Rich Danker
Among the beneficiaries of higher interest rates will be companies with little or no long-term debt. During the financial crisis of 2008, the problem for debt financing was the lack of available funds, i.e. the credit crunch.
The next year the bond market roared back to life with a boost from the Federal Reserve, which allowed firms marred by bad capital structures to refinance billions in debt maturing by 2014 that was otherwise facing restructuring. Now the price of the Fed’s intrusion into the capital markets is coming due in the form of higher inflation and higher interest rates.
With these expectations, high-grade corporate bond yields have been inching up all through the Fed’s QE2. The idea of a blue chip firm issuing at 1 percent, as IBM did for its three-year notes last summer, is now obsolete when inflation over the last three months exceeds 5 percent on an annualized basis. As the market value of corporate bonds sinks, we can expect debt-heavy firms to be punished through declining share prices.
If the vista for corporate debt going from bright to bleak in that time frame is surprising, consider what Michael Milken wrote about capital structure in the Wall Street Journal in April 2009: “The optimal capital structure evolves constantly, and successful corporate leaders must consider six factors – the company and its management, industry, dynamics, the state of capital markets, the economy, government regulation and social trends. When these six factors indicate rising business risk, even a dollar of debt may be too much for some companies.”
Going back to the early 1970s, Milken charted a trend of firms misplaying capital structure decisions – failing to have enough cash on hand to survive credit crunches and overleveraging during good times to buy back stock. His argument was that Merton Miller’s Nobel -winning theorem about the irrelevance of capital structure was wrong, and a firm’s mix of debt and equity affects its value. But after forty years, why haven’t they gotten any better at it? The one factor inside Milken’s rubric that has evolved most constantly is the price of debt – interest rates.
For the complete article.
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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