Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • Dick Young’s Safe America
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Dynamic Maximizers®
  • Retirement Compounders®
  • Free Email Signup

Investors Devour Bonds

June 12, 2020 By Jeremy Jones, CFA

By pzAxe @ Shutterstock.com

Joe Rennison and Eric Platt report for the Financial Times on investors’ demand for bonds from blue-chip companies. They write:

Bonds sold since March by blue-chip US companies including Northrop Grumman, Intel and Coca-Cola have surged in value, as investors scrambled to get hold of the unusually high coupons offered during the most intense phase of the pandemic.

Intel’s $1bn bond maturing in 2060, launched just before the US Federal Reserve announced sweeping measures to support the corporate bond market, has soared to more than 144 cents on the dollar from its sale price of just over 98 cents, according to data from MarketAxess. At the time it was sold the bond was offering a yield of more than 5 per cent — roughly four times better than the longest-maturity US Treasury yield.

Morgan Stanley’s $5.5bn 30-year bond has risen to 148 cents on the dollar since it was issued on March 19 — a point close to the bottom of the coronavirus-induced sell-off in the corporate bond market.

Such returns are similar to those on offer in the equity market, where the benchmark S&P 500 index is up 34 per cent from its March nadir.

“The price moves are shockingly big,” said Matt King, global macro strategist at Citigroup. “But they’re the natural consequence of one of the most abrupt sell-offs ever being followed by easily the most abrupt rally back.”

Bonds — especially highly rated, investment-grade bonds — rarely deliver such rapid returns, as investors typically buy them for steady income rather than price appreciation. Such wild swings are a sign of investors clamouring for the high interest rates that issuers were pushed into paying as the market convulsed.

Read more here.

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • Bond Bear Market Picking Up Steam
  • Highest Corporate Bond Yields in Five Years
  • Investors Flee High-Yield Debt
  • Author
  • Recent Posts
Jeremy Jones, CFA
Jeremy Jones, CFA, CFP® is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. Richard C. Young & Co., Ltd. was ranked #5 in CNBC's 2021 Financial Advisor Top 100. Jeremy is also a contributing editor of youngresearch.com.
Latest posts by Jeremy Jones, CFA (see all)
  • Despite Inflation, Best Year Ever for Vacation Demand - July 1, 2022
  • Purchases of Gaming Chips for Crypto Mining Tailing Off - June 30, 2022
  • Are Google, Amazon, and Microsoft About to Crash This Specialized Real Estate Market? - June 29, 2022

Search Young Research

Most Popular

  • Here’s Why You Need a 15-Year Retirement Investment Plan
  • Why Work When Taxes Take It All?
  • Are Google, Amazon, and Microsoft About to Crash This Specialized Real Estate Market?
  • What Happens to Your Passwords When You Die?
  • Regulators' Bungled Attempts to Cut Emissions Drove Oil Prices Higher
  • Is the Great Job Boom Over?
  • RURAL RENAISSANCE: America Finds the Country Again
  • The Power of a Compound Interest Table
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • Your Survival Guy: Clearing the Decks, Buying a Boat, Seeing the World and More

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Could this Be the Vanguard GNMA Winning Edge?

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

RSS The Latest at Richardcyoung.com

  • Happy Independence Day
  • For Investors Who Want to Stop Worrying About a Market Crash
  • Breaking News: House Election Update
  • WATCH: New York Governor Melts Down When Asked for Facts
  • Florida Is a Refresher Course in American Greatness
  • Should You Believe Ms. Hutchinson?
  • Biden’s Economy Even Weaker than Thought
  • A Cashless Society Is A Debacle for Americans
  • Time to Save, Troubles Dining Out, and Intelligence on Yellowstone
  • Democrats Running AWAY from Biden on the Campaign Trail

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Copyright © 2022 | Terms & Conditions

 

Loading Comments...
 

    loading Cancel
    Post was not sent - check your email addresses!
    Email check failed, please try again
    Sorry, your blog cannot share posts by email.