Corporate bonds rated Baa or triple - B, the low end of investment grade by Moody's and Standard & Poor's designations, offer the biggest yield premium since the early 1930s, notes RBC Capital Markets.
Not exact matches
The
BAA spread refers to the yield on
corporate bonds above the
rate on comparable maturity Treasury debt, and is a market - based estimate of the amount of fear in the
bond market.
The Fund pursues its investment objective by investing primarily in fixed income securities, such as U.S. Treasury
bonds, notes and bills, Treasury inflation - protected securities, U.S. Treasury Strips, U.S. Government agency securities (primarily mortgage - backed securities), and investment grade
corporate debt
rated BBB or higher by Standard & Poor's Global
Ratings or
Baa or higher by Moody's Investors Service, Inc., or having an equivalent
rating from another independent
rating organization.
Key credit spreads were widening, such as those between intermediate - term treasury
bonds and riskier
corporate bonds in funds like iShares Baa - Ba Rated Corporate Bond ETF (BATS: QLTB) or SPDR High Yield Bo
corporate bonds in funds like iShares
Baa - Ba
Rated Corporate Bond ETF (BATS: QLTB) or SPDR High Yield Bo
Corporate Bond ETF (BATS: QLTB) or SPDR High Yield
Bond (JNK).
This is when the yield of long - dated
Baa corporate bonds (seasoned) equals the prime lending
rate that banks charge.
The indices used for each asset class are: core real estate, NCREIF Property Index, listed REITs, FTSE NAREIT Equity REITs Index; government
bonds, Bank of America Merrill Lynch Treasury Master;
corporate bonds Baa - rated, Barclays US Aggregate Corporate Intermediate; large - capitalization stocks, Russell 1000 index; small - cap stocks, Russell 2000 Index; commodities, S&P GSCI Commodi
corporate bonds Baa -
rated, Barclays US Aggregate
Corporate Intermediate; large - capitalization stocks, Russell 1000 index; small - cap stocks, Russell 2000 Index; commodities, S&P GSCI Commodi
Corporate Intermediate; large - capitalization stocks, Russell 1000 index; small - cap stocks, Russell 2000 Index; commodities, S&P GSCI Commodity Index.
Deviations from the historically normal 80 - 180 bp spread between REIT dividend yields and
Baa -
rated corporate bond yields have generally provided a surprisingly reliable valuation signal and a surprisingly reliable predictor for future performance.
At the beginning of the year, though, the
Baa -
rated corporate bond yield was just 4.23 percent, meaning that the REIT -
Baa spread was extraordinarily small at just 29 basis points.
To take the extreme case, it's very rare for the
Baa -
rated corporate bond yield to be less than the average REIT dividend yield: that has happened only at times when investors were most dramatically avoiding REITs, most recently in March 2009 at the lowest point of the Great Financial Crisis — and in the 12 months following that episode, those investors who bucked the market and bought into REITs were rewarded with total returns that exceeded 100 percent.