Tuesday, January 29, 2008

Bond Yields

For those prepared to take some risk, there are some astonishing deals available. Countrywide Home Mortgages, which was just acquired by Bank of America, has a number of S&P BBB+ rated bonds with maturities in the months to a 1 1/2 year range with annualized yields to maturity above 9%--in some cases, above 10%. (I just bought bonds due in July 2009 with an annualized YTM of more than 11%.)

I wouldn't encourage you to put a lot of your portfolio into such bonds. It seems unlikely that Countrywide--or rather Bank of America, who now owns them--will default on these bonds--especially since falling interest rates may solve some of Countrywide's problem with subprime mortgages--but it does provide a way to sweeten the return on your portfolio with, I think, less risk than many stocks right now.

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