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Quality Corporate Bonds Become Deeply Discounted amid Rising Rates, Offering Investors Attractive Income Opportunity

  • Almost 1,500 high-grade corporate bonds from major companies are trading at steep discounts of 50-80% below face value. This presents an opportunity for investors to buy quality bonds cheaply.

  • Companies like Apple, Microsoft, Google, Disney, and Comcast have issued bonds in recent years when rates were low that are now discounted.

  • With interest rates rising, bond prices have fallen based on the inverse relationship between rates and prices. But the bonds still offer attractive yields.

  • Investors can buy individual bonds through brokers or gain exposure through bond mutual funds and ETFs.

  • Long-dated bonds maturing in 10+ years from strong companies offer income potential and limited credit risk if held to maturity.

marketwatch.com
Relevant topic timeline:
Global financial companies have sold $2 trillion worth of bonds in a record amount of time this year, with European lenders paying off central bank loans and Chinese firms strengthening their balance sheets amidst economic uncertainty.
High-yield bonds outperforming relative to corporate bonds suggests a risk-on environment for stocks, according to a bullish signal in the bond market.
Closed-end municipal bond funds are currently trading at the largest discounts to their asset value in the past 18 years due to recent fixed-income market selloffs.
Bank of America is forecasting that $400 billion of state and local bonds will be sold next year, which is slightly higher than this year's sales.
Rising concerns over U.S. government spending and the budget deficit have led to a sell-off in Treasury bonds, pushing prices to 17-year lows as bond vigilantes punish profligate governments by selling their bonds.
Bank of America is issuing a 10-year corporate bond with a 6.55% coupon rate, offering a higher interest rate than other banks and surpassing the rates of certificate of deposits on the open market.
Investors are turning to US Treasury bonds with yields near 5%, the highest since 2007, for healthy, low-risk returns as the stock market remains volatile.