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As U.S. government bond rates continue to decline, investors might be tempted to move some money into lower rated, higher yielding corporate bonds. Listed below are six bonds of companies with relatively heavy exposure to the business cycle. If you are looking to add this type of exposure to your portfolio but are not interested in catching plummeting stock prices, these bonds trading below par might be of interest to you:

Alpha Natural Resources’ (NYSE:ANR) senior unsecured note (CUSIP: 02076XAC6) maturing 6/1/2021 has a coupon of 6.25% and is asking 93 cents on the dollar (7.284% yield-to-maturity before commissions). The note pays interest semi-annually and has the following call schedule: Prior to June 1, 2016, there is an equity proceeds call of 35% of the principal amount of the notes at 106.25 (please contact your broker or read the Indenture for more details on this). Beginning June 1, 2016, it is callable at the greater of 103.125 or make whole; beginning June 1, 2017, it is callable at the greater of 102.083 or make whole; beginning June 1, 2018, it is callable at the greater of 101.042 or make whole; and beginning June 1, 2019, it is callable at the greater of 100 or make whole.

Moody’s currently rates the note Ba3; S&P rates it BB (non-investment grade ratings). The note was originally offered at a price of 100, and the offer size was $700 million. The offer date was May 18, 2011. It is currently bidding 91.5 (7.518% yield-to-maturity before commissions) and has traded in a range of 93.25 (on 11/23/11) to 99.375 (on 11/15/11) since November 15, 2011. Currently, the 5/15/2021 U.S. Treasury bond (CUSIP: 912828QN3) is yielding 1.982%, which means Alpha Natural Resources’ note is asking 530.2 basis points more than a corresponding Treasury bond.

Arch Coal’s (NYSE:ACI) senior unsecured note (CUSIP: 039380AC4) maturing 10/1/2020 has a coupon of 7.25% and is asking 99 cents on the dollar (7.404% yield-to-maturity before commissions). The note pays interest semi-annually, has conditional puts for a change of control, and has the following call schedule: Prior to October 1, 2013 there is an equity proceeds call of 35% of the principal amount of the notes at 107.25 (please contact your broker or read the Indenture for more details on this). Thereafter, the call schedule is similar to ANR’s in terms of the structure, whereby the notes are callable at various prices for different time periods before the bond eventually has a call at par beginning October 1, 2018.

Your broker should be able to provide more details on the call schedule. Moody’s currently rates the note B1; S&P rates it B+ (non-investment grade ratings). The bond was originally offered at a price of 100, and the offer size was $500 million. The offer date was August 2, 2010. It is currently bidding 98 (7.562% yield-to-maturity before commissions) and has traded in a range of 98.01 (on 11/22/11) to 104.55 (on 11/17/11) since November 15, 2011. Currently, the 11/15/2020 U.S. Treasury note (CUSIP: 912828PC8) is yielding 1.899%, which means Arch Coal’s note is asking 550.5 basis points more than a corresponding Treasury note.

Weyerhaeuser’s (NYSE:WY) senior unsecured debenture (CUSIP: 962166AW4) maturing 10/1/2027 has a coupon of 6.95% and is asking 99.948 cents on the dollar (6.954% yield-to-maturity before commissions). It is non-callable and pays interest semi-annually. Moody’s currently rates the note Ba1 (non-investment grade rating); S&P rates it BBB-. The bond was originally offered at a price of 99.441, and the offer size was $300 million. The offer date was October 3, 1997.

It is currently bidding 94.699 (7.527% yield-to-maturity before commissions) and has traded in a range of 95.898 (on 11/15/11) to 106.325 (on 11/16/11) since November 15, 2011. Currently, the 11/15/2027 U.S. Treasury bond (CUSIP: 912810FB9) is yielding 2.571%, which means Weyerhaeuser’s debenture is asking 438.3 basis points more than a corresponding Treasury bond. For some details on a different Weyerhaeuser bond, read “6 Bonds To Consider Buying Right Now.”

AK Steel’s (NYSE:AKS) senior unsecured note (CUSIP: 001546AL4) maturing 5/15/2020 has a coupon of 7.625% and is asking 91 cents on the dollar (9.177% yield-to-maturity before commissions). The note pays interest semi-annually, has conditional puts for a change of control, and has the following call schedule: Prior to May 15, 2013 there is an equity proceeds call of 35% of the principal amount of the notes at 107.625 (please contact your broker or read the Indenture for more details on this). Thereafter, the call schedule is similar to ANR’s in terms of the structure, whereby the notes are callable at various prices for different time periods, before the bond eventually has a call at par on May 15, 2018.

Your broker should be able to provide more details on the call schedule. Moody’s currently rates the note B2; S&P rates it BB (non-investment grade ratings). The bond was originally offered at a price of 100, and the offer size was $400 million. The offer date was April 27, 2010. It is currently bidding 89.35 (9.483% yield-to-maturity before commissions) and has traded in a range of 89.347 (on 11/21/11) to 95.875 (on 11/15/11) since November 15, 2011. Currently, the 5/15/2020 U.S. Treasury note (CUSIP: 912828ND8) is yielding 1.782%, which means AK Steel’s note is asking 739.5 basis points more than a corresponding Treasury note.

Tutor Perini Corporation’s (NYSE:TPC) senior unsecured note (CUSIP: 901109AB4) maturing 11/1/2018 has a coupon of 7.625% and is asking 93.5 cents on the dollar (8.901% yield-to-maturity before commissions). The note pays interest semi-annually, has conditional puts for a change of control, and has the following call schedule: Beginning November 1, 2014, it is callable at the greater of 103.813 or make whole; beginning November 1, 2015, it is callable at the greater of 101.906 or make whole; and beginning November 1, 2016, it is callable at the greater of 100 or make whole.

Moody’s currently rates the note Ba3; S&P rates it BB- (non-investment grade ratings). The bond was originally offered at a price of 99.258, and the offer size was $300 million. The offer date was May 2, 2011. It is currently bidding 92 (9.212% yield-to-maturity before commissions) and has traded in a range of 90.5 (on 11/22/11) to 97.8 (on 11/15/11) since November 15, 2011. Currently, the 10/31/2018 U.S. Treasury note (CUSIP: 912828RP7) is yielding 1.518%, which means Tutor Perini Corporation’s note is asking 738.3 basis points more than a corresponding Treasury note.

Cliffs Natural Resources’ (NYSE:CLF) senior unsecured note (CUSIP: 18683KAC5) maturing 10/1/2040 has a coupon of 6.25% and is asking 97.475 cents on the dollar (6.443% yield-to-maturity before commissions). It has a make whole call, conditional puts for a change of control, and pays interest semi-annually. Moody’s currently rates the note Baa3; S&P rates it BBB-. Although this bond is not considered high-yield in the sense of having a non-investment grade rating, in today’s environment, some would consider a 6.443% yield “high-yield;” therefore, it seems appropriate to include it in this list.

The bond was originally offered at a price of 98.255, and the offer size was $800 million. The offer date was September 15, 2010. It is currently bidding 95.348 (6.612% yield-to-maturity before commissions) and has traded in a range of 95.985 (on 11/23/11) to 101.925 (on 11/21/11) since November 15, 2011. Currently, the 11/15/2040 U.S. Treasury bond (CUSIP: 912810QL5) is yielding 2.984%, which means Cliffs Natural Resources’ note is asking 345.9 basis points more than a corresponding Treasury bond.

If you are interested in purchasing any of these securities but are nervous about current economic conditions wreaking havoc on your portfolio over the coming months, learn how to hedge individual bonds in, “Protect Your Income Portfolio With Cross-Asset Hedging.”

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.

Source: 6 High Yield Bonds Trading Below Par