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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
|
0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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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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Goldman Says B Rated Junk Bonds Are ‘Sweet Spot’ Amid Recovery |
Bloomberg - Dec. 7, 2010 - By Bryan Keogh
Junk bonds with B ratings are the “new sweet spot” for investors because they’ll benefit more than investment-grade company debt as the global economy recovers, according to Goldman Sachs Group Inc.
Debt ranked B1 to B3 by Moody’s Investors Service or B+ to B- by Standard & Poor’s will return about 9.5 percent next year, or 3.2 times their historical volatility, the Goldman analysts wrote in their Global Credit Outlook 2011. The bonds have returned 2.07 percent this quarter, ahead of the 1.42 percent gain on all speculative-grade debt and second only to riskier CCC rated securities, according to Bank of America Merrill Lynch index data.
“B rated bonds are the new sweet-spot across ratings and offer the best balance of return versus risk,” strategists led by Charles Himmelberg in New York wrote in the report dated Dec. 3. “CCC rated bonds are likely to do slightly better from a total return standpoint, but will also be almost twice as volatile.”
Improving company earnings coupled with a decline in defaults may help boost speculative-grade bonds more than higher-rated securities, even as they remain susceptible to an increase in interest rates. Federal Reserve Chairman Ben S. Bernanke said Dec. 5 that the U.S. central bank may expand government debt purchases beyond the $600 billion announced last month, which would also provide a boost to corporate debt.
High-yield, or junk, debt is graded below Baa3 by Moody’s and BBB- by S&P.
Pre-Crisis Returns
Investors earned 13 percent holding B rated securities this year, more than the 11.6 percent return in 2006, the year before the start of the credit crisis, Bank of America Merrill Lynch indexes show. That’s still down from the notes’ 53 percent advance during last year’s record rally, the data show.
Lower-ranked CCC bonds returned 3.46 percent this quarter, more than B graded securities, according to Bank of America’s debt indexes.
Goldman forecasts the U.S. economy will grow 2.7 percent next year, up from its earlier 2 percent prediction, and that the long-term recovery won’t be derailed by Europe’s fiscal crisis.
“The European sovereign crisis should simmer, not boil,” the analysts wrote in the report. “Despite the economic and political tensions exposed by the crisis, we think efforts to preserve and strengthen the euro zone will ultimately succeed.”
Corporate Performance
Corporate earnings are headed for their best annual performance since 1988, according to analysts surveyed by Bloomberg, who forecast 37 percent growth this year.
The 12-month European bond default rate will decline to 3.8 percent by the end of next year, from 5.9 percent at the end of September, S&P forecast in its outlook for the region on Dec. 2. The rate will then rise to a range of 5.5 percent to 7.5 percent in 2012 leading to a “second wave of defaults,” S&P said.
For the complete article.
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