One of the biggest challenges bond investors face is how to select the best bonds out of the thousands that are available. May investors will compare bond ratings and bond YTMs, but bond rating methodologies are flawed and do not speak to whether a bond is a good investment.
Luckily, we founded BondSavvy
to solve this problem. During the September 5, 2019 edition of The Bondcast, we presented four new corporate bond investment recommendations,
which we preview below. Purchase our bond investment newsletter subscription and gain immediate access to these and all previous corporate bond recommendations.
There has been a strong bond market rally in 2019, which has made bond bargain hunting more difficult than it had been earlier this year. Investment-grade corporate bonds are impacted by changes in Treasury bond yields, as these corporate bonds trade off a credit spread to their benchmark Treasury. As a result, when Treasury bond yields plunged during 2019, the YTMs of many investment-grade corporate bonds fell, which drove a rally in investment-grade corporate bond prices.
Finding value in individual corporate bonds is all about being selective. It's finding a select number of bonds that are compelling values relative to other bonds in the marketplace. This is central to our bond investment analysis, and we believe our four recommended corporate bonds have opportunities to increase in value and achieve strong investment returns.
Figure 1 provides an overview of the four new corporate bonds BondSavvy recommended on September 5, 2019:
Figure 1: Best Bonds from September 5, 2019 Edition of The Bondcast
|Bond 1||Freight & Logistics||6.77%||3.4x||High-Yield|
|Bond 2||Natural Resources||5.19%||0.7x||Investment-Grade|
|Bond 3||Luxury Retail||4.70%||1.0x||Investment-Grade|
|Bond 4||Paper & Forest Products||5.69%||2.5x||High-Yield|
* Based on top-of-book offer prices displayed on Fidelity.com September 5, 2019 at 9:00am EDT.
** Source: BondSavvy calculations and company SEC filings. A leverage ratio is the company's total debt as of the most recently reported quarter divided by the company's EBITDA for the trailing 12-month period.