The high yield bond market needs a new name.
This week, the average yield on so-called high-yield bonds in the United States fell to 3.9%. This is only marginally higher than what Johnson & Johnson – one of only two triple A-rated companies left globally – paid as an annual coupon on a 10-year bond in 2011. It was not considered high yield then. Microsoft – the only other company to still hold triple A stock – raised funds for 10 years in 2013 with a 3.63% coupon. That was also not a high return.
Two weeks ago, Centene Corporation became the second company this year to issue a 10-year “high yield” bond with a 2.5% coupon….
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