Below-par corporate bonds yield capital gains opportunities

Much has been said about value in current markets. Are price/earnings ratios of much use if earnings...

Much has been said about value in current markets. Are price/earnings ratios of much use if earnings are set to fall? What good is a high dividend yield if the company slashes the payout? Investors, however, appear to be transferring their reservations about the equity market across to the credit market. The separating point for corporate bond investors is that bonds must pay their coupon and return par at maturity or they default. The crux of valuing a bond rests, therefore, on the answer to two key questions: how attractive is the yield relative to other assets and expectations for inflat...