3 Corporate Bonds Yielding Over 10% That Aren’t Financials!

In branching out of my traditional stock and ETF investing into asset classes I used to ignore, like high yield muni ETFs and shorting Treasuries, I can’t help but consider corporate bonds these days. While the economy has been in a shambles, some of the companies with compelling yield to maturities (YTM) are clearly nowhere near the dire straights that the Financials or the big three autos find themselves in and they have much more slack to mitigate worsening conditions than the “extreme high yield bonds” that are being offered by some of these companies on government-induced life support. While there are several offerings exceeding 10%, many of them are in these shunned sectors, so I’ve included for your consideration 3 fairly large corporations that while struggling, don’t appear to exhibit a significant solvency risk, even under moderately worsening conditions.

• Dow Chemical (DOW) - 10.7% YTM (2029). CUSIP 260543BJ1. While the botched deal with Kuwait hasn’t helped Dow’s prospects for closing the acquisition of Rohm & Haas, this in no way impedes Dow’s ability to remain a going concern. Heck, before they went insolvent, there’s plenty of dividend slashing they could undertake first with that 15% payout at today’s share price.
• International Paper (IP) - 10.7% YTM (2018). CUSIP 460146CA9. International Paper is in much the same boat as many other multinational industrials; struggling from the current economic malaise, yet carrying an enormous dividend from which to cut prior to collapse. It’s currently yielding 13% and it is widely believed it will have to slash it’s dividend, but no talk of insolvency here.
• Alcoa (AA) - 10.2% YTM (2012). CUSIP 013817AF8. Alcoa, the Aluminum giant is similarly suffering from the global economic slowdown. With an 8% dividend payout, plenty of cash going out right now that could be shored up if more difficulties are encountered.

Note that while several of these outfits have several bond offerings, I’ve selected one in particular at random. Feel free to check for more that may have different yields/maturities. CUSIP is the descriptor you’d want to use with your broker for that particular company.

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Comment by rdurig

2009-08-18 18:18:15

Dow Chemical is issue a new issue bond:

Souce:http://investment-income.net/745-ytm-dow-chemical-dow-internotes-new-issue-corporate-bond.html

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