6 Bonds Yielding More than Twice the 10-Year Treasury

By The Financial Lexicon

In recent months, it has certainly been no easy task finding an abundance of corporate bonds worth buying.  This is especially true when looking among short- to intermediate-term bonds.  With that said, there are corporate bonds currently trading on the secondary market that carry investment grade ratings from both Moody’s and S&P and are yielding more than twice the 10-year Treasury.

I would like to present the details of a sample of those corporate bonds with less than 10 years to maturity that are currently yielding over 3.94%.  The CUSIPs I mention in this article are not meant to be an endorsement of the credit quality of any particular bond. Instead, I am hoping to illustrate how it is still possible, despite what you may hear from some financial professionals, to find respectable yields in bonds that can be categorized as intermediate-term and are considered by the rating agencies to represent a credit risk that warrants an investment grade rating.  Additionally, I am hoping to illustrate the breadth of industries across which such bonds can be found.

If one of the following bonds piques your interest, please remember to do your own due diligence on the financial profile of the corresponding company. Only you can determine if taking the counterparty risk of purchasing individual bonds is suitable for you.

AngloGold Ashanti Holdings Finance’s (AU) senior unsecured note (CUSIP: 03512TAC5) maturing 8/1/2022 has a 5.125% coupon and is asking 101.902 cents on the dollar (4.871% yield-to-maturity before commissions). It has a make whole call and pays interest semi-annually. Moody’s currently rates the note Baa2; S&P rates it BBB-.

Murphy Oil’s (MUR) senior unsecured note (CUSIP: 626717AD4) maturing 6/1/2022 has a 4.00% coupon and is asking 98.047 cents on the dollar (4.257% yield-to-maturity before commissions). It pays interest semi-annually, has a make whole call, and is continuously callable at par beginning 3/1/2022. Moody’s currently rates the note Baa3; S&P rates it BBB.

Hewlett-Packard’s (HPQ) senior unsecured note (CUSIP: 428236BM4) maturing 6/1/2021 has a 4.30% coupon and is asking 99.372 cents on the dollar (4.391% yield-to-maturity before commissions). It has a make whole call and pays interest semi-annually. Moody’s currently rates the note Baa1; S&P rates it BBB+.

Moody’s Corp.’s (MCO) senior unsecured note (CUSIP: 615369AB1) maturing 9/1/2022 has a 4.50% coupon and is asking 100.518 cents on the dollar (4.432% yield-to-call before commissions). It pays interest semi-annually, has a make whole call, and is continuously callable at par beginning 6/1/2022. S&P currently rates the note BBB+.

Cliffs Natural Resources’ (CLF) senior unsecured note (CUSIP: 18683KAB7) maturing 10/1/2020 has a 4.80% coupon and is asking 101.331 cents on the dollar (4.59% yield-to-maturity before commissions). It has a make whole call and pays interest semi-annually. Moody’s currently rates the note Baa3; S&P rates it BBB-.

Safeway’s (SWY) senior unsecured note (CUSIP: 786514BU2) maturing 12/1/2021 has a 4.75% coupon and is asking 102.22 cents on the dollar (4.441% yield-to-maturity before commissions). It has a make whole call and pays interest semi-annually. Moody’s currently rates the note Baa3; S&P rates it BBB.

When I ran the screen for investment grade corporate bonds with less than 10 years to maturity and yields greater than 3.94%, 84 CUSIPs were returned.  Six of those bonds are presented in this article.  By dropping the rating three notches to a minimum of Ba3/BB-, the number of CUSIPs returned by the screen more than tripled.  If you are interested in owning corporate bonds with less than 10 years to maturity that are yielding more than 3.94%, you will have plenty to choose from.  The trick will be to find one with the appropriate credit risk for your risk tolerance.

Please be aware that prices in the over-the-counter U.S. bond market may vary depending on the broker you use. The current prices may also differ greatly from those listed at the time this article was written. For more information on any of these notes, including additional call or put features, please contact your broker or read the indenture.