Seeking Alpha
Bonds, long-term horizon, dividend investing, macro
Profile| Send Message|
( followers)  

Over the past couple weeks, several new corporate bonds were issued. Although the majority of the new issues are investment grade rated notes, there are some high-yield bonds (NYSEARCA:HYG) included in the bunch. I would like to present details on four of these corporate bonds.

Before doing so, I would like to point out that in my recent article, "Lay Off The High-Yield Bonds For Now," I noted that now is the time to be a bit more cautious about putting new money to work in high-yield corporate bonds (NYSEARCA:JNK). However, from an individual bond perspective, there are certainly exceptions. Perhaps you will find one of the following newly issued notes attractive. If you are interested in purchasing any of the following corporates but are a bit uncomfortable with where they are currently trading, add them to a watch list for the next time spreads in the high-yield market widen or interest rates rise across the board.

Ball Corp.'s (NYSE:BLL) senior unsecured note (CUSIP: 058498AR7) maturing 3/15/2022 has a coupon of 5.00% and is asking 101.75 cents on the dollar (4.778% yield-to-maturity before commissions). It has a make whole call and pays interest semi-annually. Moody's currently rates the note Ba1 and S&P rates it BB+. It was originally offered at a price of 100, and the offer size was $750 million. The offer date was February 24, 2012. Currently, the 2/15/2022 U.S. Treasury note (CUSIP: 912828SF8) is yielding 2.003%, which means Ball's note is asking 277.5 basis points more than a corresponding Treasury note.

Goodyear Tire & Rubber's (NASDAQ:GT) senior unsecured note (CUSIP: 382550BC4) maturing 5/15/2022 has a coupon of 7.00% and is asking 100.50 cents on the dollar (6.913% yield-to-par call before commissions). It pays interest semi-annually and has the following call schedule: It is callable 5/15/2017 at 103.50, 5/15/2018 at 102.33, 5/15/2019 at 101.167, and 5/15/2020 at par. There are other conditional call and conditional put features as well. Moody's currently rates the note B1 and S&P rates it B+. It was originally offered at a price of 100, and the offer size was $700 million. The offer date was February 23, 2012. Currently, the 2/15/2022 U.S. Treasury note (CUSIP: 912828SF8) is yielding 2.003%, which means Goodyear's note is asking 491 basis points more than a corresponding Treasury note.

Range Resources' (NYSE:RRC) senior subordinated note (CUSIP: 75281AAN9) maturing 8/15/2022 has a coupon of 5.00% and is asking 101.332 cents on the dollar (4.797% yield-to-par call before commissions). It pays interest semi-annually and has the following call schedule: It is callable 2/15/2017 at 102.50, 2/15/2018 at 101.667, 2/15/2019 at 100.833, and 2/15/2020 at par. There are other conditional call and conditional put features as well. Moody's currently rates the note Ba3, and S&P rates it BB. It was originally offered at a price of 100, and the offer size was $600 million. The offer date was February 24, 2012. Currently, the 2/15/2022 U.S. Treasury note (CUSIP: 912828SF8) is yielding 2.003%, which means Range Resources' note is asking 279.4 basis points more than a corresponding Treasury note.

R.R. Donnelley & Sons' (NASDAQ:RRD) senior unsecured note (CUSIP: 257867AY7) maturing 3/15/2019 has a coupon of 8.25% and is asking 101.25 cents on the dollar (8.013% yield-to-maturity before commissions). It has a make whole call and pays interest semi-annually. Moody's currently rates the note Ba1 and S&P rates it BB+. It was originally offered at a price of 100, and the offer size was $450 million. The offer date was February 28, 2012. Currently, the 2/28/2019 U.S. Treasury note (CUSIP: 912828SH4) is yielding 1.399%, which means R.R. Donnelley's note is asking 661.4 basis points more than a corresponding Treasury note.

If you are interested in purchasing any of these securities but are nervous about counterparty risk wreaking havoc on your portfolio, 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. I discuss this in this article. The current prices may also differ greatly from those listed at the time this article was written. For additional information on any of these notes, please contact your broker or read the indenture.

Also, please do your own due diligence on the financial profiles of the companies mentioned in this article. Only you can determine if taking the counterparty risk of purchasing individual bonds is suitable for you.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: I own BLL bonds, although not the CUSIP mentioned in this article.

Source: 4 High-Yield Corporates Hot Off The Press