Hi all, I’m looking at a number of bonds to try and form a view on what they will yield in a number of years. Is there anybody in fixed income I could chat with offline? cfasod at the g. mail dot com Thanks.
If you are talking about corporates, you can decompose the yield into the yield on the benchmark and the spread. For instance, lets say you are looking at Kinder Morgan 5.3% 09/15/20’s offered at +160. Current yield is 4.17%, 160 bps from spread and 2.57% from the 10 year. To look at the total return, you need to have an outlook on the credit. Will Kinder Morgan outperform or underperfrom other pipelines (in terms of credit improvement). Will pipelines outperform other MLPs? Will MLPs outperform other sectors? Will credit conditions as a whole worsen or improve? Lots of factors but thats the quick and dirty.