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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
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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
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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)
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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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Some Bonds Offer Diamonds in the Trough |
By GREGORY ZUCKERMAN, WSJ.com
December 1, 2008
Stocks are down sharply. But some of the best opportunities lie in bonds.
Relatively safe debt issues are selling at juicy yields that, until recently, were only offered by junk-rated companies.
The best strategy: Focus on the debt of low-profile companies in relatively stable businesses. While bonds from household names such as PepsiCo yield 5% or so, yields for more obscure companies, such as National Rural Utilities Cooperative Finance Corp., are much higher.
The not-for-profit cooperative makes loans to rural utilities, most of which don't have access to capital markets. The company recently issued A-rated, non-callable bonds maturing in 2018 that offer a hefty yield of about 9.40%, a more than six-percentage-point spread to 10-year Treasurys.
A year ago, the spread was less than one percentage point, showing how investor appetites have changed. But its credit-default swaps aren't especially wide.
The company, with $20 billion of loans outstanding, has faced just $181 million of net charge-offs since 1969. While paying high rates on its recent debt could weigh on National Rural's margins, its blended cost of financing was just 4.56% as of Aug. 31, and it charged its customers a rate of 5.52%.
Another overlooked bond is from Thermo Fisher Scientific, the largest provider of research laboratory products. It has $932 million of net debt and a $14 billion market capitalization.
The 2015 bonds yield about 9.2%, despite an investment grade credit rating of BBB+. The company is expected to generate annual free cash flow of about $1.4 billion over the next three years, more than enough to meet ongoing needs, say analysts.
The bond issue is relatively illiquid, with just $500 million outstanding. That scares away some larger investors but provides an opportunity for those willing to hold them to maturity.
By sticking with overlooked bonds, investors can reap rewards.
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| Stuff to look at |
Yield and Income Newsletter: A must have for income investors. subscribe NOW
S&P Commentary and Newsletters: S&P
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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