junkman
4-27-11, 1:56pm
Generally, zero-coupon bonds (of any type and from any issuer) offer a slight yield-premium over their couponed counterparts of comparable credit-quality and maturity. Obviously, the fact that one can reinvest actual coupons might more than make up for their small difference in projected YTM, just as, sometimes, zeros are the better way to go, depending on one’s capital and intentions.
Anyhow, I was poking around in Treasuries just now, trying to see what is action is, and it can be observed that Treasury strips offer a YTM premium over conventional T-notes/ T-bonds that ranges from a quarter-point to three-eighths of a point. Also, there’s a yield difference that differs depending on whether the principal or the interest has been stripped.
It’s way too early to be buying right now. But it’s never too early to gain some familiarity with the territory, so that when the buying time does come, the easy part of the homework has already been done.
Anyhow, I was poking around in Treasuries just now, trying to see what is action is, and it can be observed that Treasury strips offer a YTM premium over conventional T-notes/ T-bonds that ranges from a quarter-point to three-eighths of a point. Also, there’s a yield difference that differs depending on whether the principal or the interest has been stripped.
It’s way too early to be buying right now. But it’s never too early to gain some familiarity with the territory, so that when the buying time does come, the easy part of the homework has already been done.