Low interest coupons in America: record lows for junk bond of the aluminum can manufacturer Ball

The bonds of financially weak companies in the United States continues to be high in the course. The rising rates push down the yield for high-yield bonds, the

Low interest coupons in America: record lows for junk bond of the aluminum can manufacturer Ball

The bonds of financially weak companies in the United States continues to be high in the course. The rising rates push down the yield for high-yield bonds, the so-called High-Yield Bonds to record lows. The manufacturer of aluminum cans, Ball Corp., has now issued a ten year bond in the amount of $ 1.3 billion, of which the interest coupon of 2.875 per cent, the lowest ever in the American market for junk bonds, with a maturity of at least five years has passed.

Markus Frühauf

editor in the economy.

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The company is rated by the rating Agency Standard&Poor's (S&P), with "BB+," one level below the level ("BBB"), of the Issuer to the investment-worthy area ("Investment Grade") counts. In the case of Moody's Ball with "Ba1" is also only one level below Investment Grade ("Baa3").

But in other junk bonds to benefit the United States by an inflow of investor money into High-Yield Bonds specialist Fund. Many companies with weak credit ratings try to go currently in bonds, in order to secure the low interest rates. The yields on High-Yield Bond market have fallen this year, an average of, at times, more than 11 percent and 5.36 percent.

High credit risks

the American Central Bank, the Fed, which supports the Corona, with the crisis in the market by purchasing out of this asset class, exchange-listed index funds (Exchange Traded Funds; ETF's). The American High-Yield market has a volume of 1.5 trillion dollars. Of these, 14 percent is allocated to energy companies, and in particular the shale oil Fracker.

The energy companies are with the fall in Oil prices, especially under pressure. So at the end of June, Chesapeake Energy, a pioneer in the Fracking of shale oil and gas had to apply for creditor protection. The default risks on the market for high-yield bonds are significantly higher than in other areas of the bond market.

Updated Date: 11 August 2020, 12:19

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