Equity Blue

The recent article presented the concept of the yield to maturity as an universal indicator, which provides the real annual yield offered by a given bond. The universality of this indicator enables to compare various bonds between each other. The yield to maturity derives from the price, for which the given bond can be bought. If the price of the bond grows, its yield to maturity decreases and vice versa. Which factors influence the bond price, respectively its yield to maturity over time? First, it is the creditworthiness of the issuer , and second, it is the development of market interest rates . Market interest rates will be reviewed in the next article. Below we are going to look at the issuer’s creditworthiness. Creditworthiness of the Issuer The more is the issuer creditworthy the lower are his borrowing costs. Among the most reliable issuers are being considered states and their governments, and that is why their bonds are usually more expensive, respectively they offe