How to Find Good Bond Buys?
With interest rates rising, it’s time to eye bonds again. The yields on Treasuries don’t thrill me — and the government’s escalating debt is another worry — but certain corporate bonds look right, especially inside an IRA, where you don’t have to pay tax on the interest and you can ride out any temporary declines in market value. At times like these I prefer individual bonds to bond funds. (The exception is funds that buy unusual stuff like foreign or junk bonds). A quick canvass finds some investment-grade issues (BBB by Standard & Poor’s or Baa by Moody’s) that pay close to or even a hair more than the 8%, the level where the reward justifies the risk, in my opinion. That’s the yield to maturity (or yield to call, if the bond is callable). But a lot of the bonds I’m about to discuss are priced close to 100 cents on the dollar, so the current yield and the coupon yield are close to the yield to maturity. Besides, we needn’t quibble here over a few ticks. The deal is this: Ford Motor
