The high-yield bond market needs a new name.
This week, the average yield across so-called high-yield bonds in the US fell towards 3.9 per cent. That’s only marginally above what Johnson & Johnson — one of only two pristine, triple-A rated companies left globally — paid as an annual coupon in a 10-year bond in 2011. It wasn’t considered a high yield then. Microsoft — the only other company to hold the triple-A title still — raised 10-year money in 2013 at a coupon of 3.63 per cent. That wasn’t high yield either.
Two weeks ago, Centene Corporation became the second company this year to issue a 10-year “high-yield” bond with a 2.5 per cent coupon. Two-years ago, the US government would have paid more.
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