Friday, December 19, 2008
Further to my previous post, here is a chart comparing the average yield on high-yield (junk) bonds. Very interesting how yields almost double beginning last September. Investment grade yields are declining but junk yields are not yet declining. This is at odds with the strong performance of some junk bond funds (e.g., HYG) lately, but that could be due to the fact that the Lehman data cover all bonds and not all bonds trade every day, whereas the ones in the HYG fund represent very large and liquid issues. In any event, there is PLENTY of room for junk yields to come down.
Posted by Scott Grannis at 3:33 PM