High(?) Yield Bonds

Dennis McCarthy – (213) 222-8260 – dennismccarthy@ariesmgmt.com

New high yield bonds are now being issued at interest rates that don’t really qualify as high.

Forbes magazine reports that the 30-day average high yield new issue bond yield fell to 6.11% at the end of January.

If your company has debt outstanding in an amount of $100 million or more, your company should consider issuing high yield bonds at these historically low rates.

Many companies continue to borrow at short-term floating rates because those rates are amazingly low. Most likely, short-term floating rates won’t stay this low for 5 to 10 years, however. 

In contrast, today’s high yield bond rates present an opportunity to lock in low rates for a long period.

Also, short-term floating rate debt typically carries covenants that restrict a company. 

Again, in contrast, high yield bonds typically have very few covenants restricting the issuer. 

Please contact me to discuss raising high yield bonds or any capital market transaction.

Forbes article link: http://www.forbes.com/sites/spleverage/2013/01/22/high-yield-bond-yields-hit-record-low-6-11/