Sentences with phrase «lesser rated bonds»

Companies with lower credit risk (higher credit rating) often enjoy a competitive advantage over their peers because higher rated companies can sell their bonds at a premium to lesser rated bonds.

Not exact matches

As the business sector accumulates more surplus cash, it has the effect of driving down interest rates because there's less demand for corporate bonds and other forms of business lending.

Typically, higher interest rates make existing bonds less attractive to buyers, since they can get new notes at loftier yields.

While Fink is right to point out that low interest rates are putting a large burden on those of us trying to save retirement, he does not address the fact that central banks aren't primarily responsible for the fact that bonds of all types are yielding less today than we're used to.

Alternatively, it's best to shorten the average term to maturity of your bond portfolio as interest rates enter into a rising cycle, because the shorter the term, the less their price will be affected.

She might equally assume the five - year bond is less volatile because it has the higher coupon rate.

We also already know that the higher a bond's coupon rate, the less its price will be affected by interest rate swings.

This makes sense; lower growth should result in bond yields falling, anticipating lower Bank of Canada rates in the future and less need for a risk premium around inflation.

Investors are set to snap up the bonds with an interest rate of less than 3.4 %, the Financial Times reported on Thursday, or about half the rate Sprint would have had to pay if it issued the bonds without any backing.

Meanwhile long rates are finally beginning to nudge higher despite demographic trends, structurally elevated risk aversion, stubbornly low inflation, strong institutional demand for long - dated bonds and quantitative easing (although less relevant to Canada).

Interest rate expectations are constantly changing over the short - term but over longer periods bond returns are more or less based on math.

For example, if you hold a bond paying 5 % interest and market rates rise to 6 %, investors would need to pay less for your bond to be compensated for the lower than market rate.

The problems is that it's not exactly an apples - to - apples comparison with stock returns because bonds are more or less driven the starting interest rate.

As rates creep higher overseas in response to the gradual removal of policy accommodation in Europe and Asia, foreign buyers will have less incentive to hunt for yield in U.S. bonds.

Because most wealthy Chinese seem to think about RMB in terms of USD or Hong Kong dollars, it is the fear that any depreciation of the RMB against those two currencies (the Hong Kong dollar is pegged to the USD through a modified currency board) greater than the couple of percentage points interest rate differential would yield less than equivalent USD or Hong Kong dollar bonds.

But keep in mind: More interest rate sensitive bonds generally have higher yields, so moving to a shorter duration investment could result in less income.

As these bonds move toward maturity, the fund's overall interest rate sensitivity gradually declines since bonds with shorter maturities tend to be less sensitive to interest rate changes.

Since changes in interest rates impact bond funds differently than bonds and CDs, estimates of price sensitivity may be less accurate the larger the shift in interest rates.

Although bonds generally present less short - term risk and volatility than stocks, bonds do contain interest rate risk (as interest rates rise, bond prices usually fall, and vice versa) and the risk of default, or the risk that an issuer will be unable to make income or principal payments.

«With the Italian 10 - year bond yielding less than its US counterpart, with clear signs of accelerating growth and inflation in Europe, and a depressed Euro adding fuel to the fire, assets correlated to European rates will be vulnerable in 2017,» says Mitchell.

Since bonds are generally considered to be less risky, and a higher interest rate generally increases demand for bonds, that may hurt demand for stocks.

Typically an issuer will call a bond when interest rates fall, potentially leaving investors with a capital loss or loss in income and less favorable reinvestment options.

They are also less likely to have call protection, which means that if a company's financial condition or credit rating improves, the issuer can call its outstanding bonds and take advantage of lower funding rates.

Because credit and default risk are the dominant drivers of valuations of high yield bonds, changes in market interest rates are relatively less important.

Typically an issuer will call a bond when interest rates fall, potentially leaving investors with capital losses or losses in income and less favorable reinvestment options.

Currently, participants who have not taken a distribution receive interest credits at the rate equal to the 30 - year Treasury bond yield plus 0.5 % but not less than 5 %; the «interest credit» rate is adjusted annually.

For example, investors might use the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) to gain access to greater credit risk through an ETF focused on bonds rated BB and B, and the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) to gain access to less credit risk through an ETF focused on bonds rated A and BBB.

Will dividend investors continue to purchase suddenly volatile, high - yielding strategies when bonds offer higher rates and less risk?

We'll assume that $ 1,000,000 worth of bonds costs $ 1,000,000 (it could be slightly more or slightly less), with a rate of 2.70 %.

The time to maturity is important because an increase in interest rates affects short - maturity bonds less than it does longer - dated bonds.

When interest rates are falling, bonds are rising, we may rise less.

As Rosenbluth noted, HYDB allocates more of its roster to B - rated bonds and less to CCC - rated issues than do the two largest, traditional junk bond ETFs.

Bond investments also give better interest rates with less risk.

The biggest focus here was on short - term securities, which tend to be less vulnerable to U.S. Federal Reserve's rate hikes than longer - term bonds are.

Stocks with a history of consistently growing their dividends have historically tended to perform well and exhibit less volatility in a rising rate environment, while high yielding dividends, often considered «bond - like proxies,» have tended to be more vulnerable (due to their high debt levels) and have historically followed bond performance when rates rise.

Bond prices fall when rates rise, but short - term munis are less sensitive to rate fluctuations than longer - term bonds.

Short - term bonds tend to be less vulnerable to rising rates than longer - term bonds, while typically providing a higher yield than cash.

This is because investors are worried about rising interest rates, something that makes investment in utilities less attractive compared to bonds and other high yield stocks.

More bonds in the market lead to greater supply and less relative demand, which drives up interest rates for those bonds.

According to Kiplinger's 2016 Outlook for Municipal Bonds, incremental rate hikes pose much less downside risk to municipal bonds than to Treasuries of equivalent maturiBonds, incremental rate hikes pose much less downside risk to municipal bonds than to Treasuries of equivalent maturibonds than to Treasuries of equivalent maturities.

I hope the rates increase gradually, but less than those being offered on this bond, so that the bond reaps a premium.

Unlike certain «bond market proxies» — companies like consumer staples, utilities and REITs — they may be less affected by the gradual rate hikes the Fed seems to have in mind.

It is true Catalonia has regional bonds, however, in comparison to the debt offered by the regional banks, it is much less liquid and it offers only a marginally higher yield that doesn't correctly reflect the riskiness of the bond or the rating.

In early August, yields on 10 - year bonds were around 75 basis points above the cash rate, slightly less than the average differential since the mid 1990s (Graph 66).

Translated from math - speak to English, we're more or less saying, «the monthly returns of the bond portfolio is equal to some multiple of rate changes plus some multiple of credit spread changes.»

As an investor's investment horizon lengthens, however, a diversified portfolio of U.S. equities becomes progressively less risky than bonds, assuming that the stocks are purchased at a sensible multiple of earnings relative to then - prevailing interest rates.

Asia's sovereign bonds will likely be less endangered by rising interest rates and less vulnerable to Western policies of financial repression, which erode the purchasing power of their citizens» savings.

I've previously outlined that high yield credit risk is typically less ideal than simply gaining credit exposure through stocks and rate exposure through bonds.

Holding an individual bond to maturity will result in the return of principal (assuming the bond issuer doesn't default), but those nominal dollars will be worth less with inflation and during periods of higher interest rates.

These bonds are issued by less - creditworthy companies that carry a higher risk of default than better - rated issuers.