Diversity & number of bond issues: The nearly 100,000 bond issues tracked in the S&P Municipal Bond Index illustrates that the municipal market has many smaller and less frequent
issuers than the corporate bond market.
Not exact matches
FLIA will invest in fixed - and floating - rate
bonds from the full range of governmental and
corporate issuers representing developed markets other
than the U.S..
3 The iBoxx US dollar
corporate bond index, for example, comprises more
than 4,200
bonds from 1,200
issuers (associated with 900 companies), all with varying credit ratings, coupons and other structural features; see Tierney and Thakkar (2015).
However, because the agency
bond issuers are guaranteed by the federal government these
bonds are generally considered safer
than even the safest
corporate bonds.
The S&P 500 High Yield
Corporate Bond Index tracks the junk
bonds of
issuers of the S&P 500 and as the yields indicate, on average, they tend to be better quality
than the
bonds in the broader index.
These are
bonds paying a high rate of interest because the
issuers are of lesser credit quality
than government and investment - grade
corporate bonds.
Most Municipal
bonds are exempt from federal and state taxation, so their coupon rate is typically lower
than both
Corporate and Treasury
bonds, presuming the Municipal
bond issuer has a solid credit rating.
As credit conditions change,
corporate issuers experience different price responses, some more extreme
than others, allowing for rebalancing into the temporarily cheap
bonds of ultimately sound companies.
With a portfolio composed of investment - grade debt from
corporate, sovereign and supranational
issuers with three - year maximum maturities, the iShares 1 - 3 Year Credit
Bond ETF (NYSEARCA: CSJ) aims to offer a higher distribution yield
than comparable all - Treasury funds, but it does have a marginally higher credit risk.
The secondary market for
corporate bonds may be less active
than the market for ordinary shares, making it harder for the ETF
issuer to sell its
bond investments.
For example, I could — could — ask a borrower more detailed questions
than I could from a muni
bond issuer,
corporate bond issuer, etc..
Mordy adds the caveat that ZDB may expose investors to more
corporate issuer risk
than a broad market
bond ETF like BMO Aggregate Bond Index (Z
bond ETF like BMO Aggregate
Bond Index (Z
Bond Index (ZAG).