Why is YTW (Yield-to-Worst) not available for some callable bonds?
Why is YTW (Yield-to-Worst) not available for some callable bonds?
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Franck Dernoncourt · External communityPost link
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Author: Franck Dernoncourt
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E.g., I am looking at
67765QDG8
("Oh St Wtr Dev Auth REV 5% 06/01/2023") on
Schwab
. It is callable but the yield to worse isn't indicated:
Bond details:
https://i.sstatic.net/GNt20.jpg
("Call Details: No Cash Call Identified").
From my understanding, since the bonds is callable, its yield to worse may be lower than the yield to maturity. Consequently, I'd like to know the yield to worse of this bond.
How can I find out the yield to worse (YTW) of a municipal bond when my broker fails to disclose it?
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littleadv · External communityPost link
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Author: littleadv
Original post: https://money.stackexchange.com/a/155830
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As usual, my first advice to you is to buy a dictionary. Most, if not all of your questions, stem from just not understanding the terms. Here's the basics on
callable bonds
.
The bond can be called under certain conditions. For example, on specific schedule, or alternatively, any time or given other specific conditions. Depending on how the bond can be called, YTW may not be possible to calculate (because some conditions may not be known in advance).
You can find the information in the bond prospectus.
Why your broker doesn't show YTW to a specific bond - you'll have to ask the broker.
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AKdemy · External communityPost link
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Author: AKdemy
Original post: https://money.stackexchange.com/a/155831
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As per your attached screenshot for
Bond details
, Schwab states that the bond is callable anytime with 30 day notice according to Schwab and displays it as callable. To find the yield to worst of an American callable bond, you would need to loop overall all potential call dates from today + 30 until maturity, compute the yield as if the call were exercised on this date, and find the worst yield possible. Most likely Schwab does not do that for American callable bonds as it's rather computationally expensive.
With regards to the bond itself, it is indeed only subject to extraordinary redemption. Insofar, Schwab is not displaying it correctly. In my opinion, if it claims it is callable, it should display a YTW as well.
With regards to callable above par, the bond traded below the redemption price of 115.546 ever since 2018, which means that yield to call (yield to extraordinary redemption) would have been above the YTM, making YTM the YTW in any case.
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0xFEE1DEAD · External communityPost link
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Author: 0xFEE1DEAD
Original post: https://money.stackexchange.com/a/155835
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FWIW, Fidelity shows a YTW that's identical to the YTM. It also doesn't show a call schedule/dates, other than "extraordinary redemption", so there's no YTW to be calculated.
Looking at the
details on EMMA
we find the
Offering Statement
Page 18:
and further on Page 19
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Quoted from Forex.com.bd-Editorial External answer — Personal Finance Stack Exchange Author: AKdemy Source score (net votes, not local likes): 0 Original post: https://money.stackexchange.com/a/155831 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. As per your attached screenshot for Bond details , Schwab states that the bond is callable anytime with 30 day notice according to Schwab and displays it as callable. To find the yield to worst of an American callable bond, you would need to loop overall all potential call dates from today + 30 until maturity, compute the yield as if the call were exercised on this date, and find the worst yield possible. Most likely Schwab does not do that for American callable bonds as it's rather computationally expensive. With regards to the bond itself, it is indeed only subject to extraordinary redemption. Insofar, Schwab is not displaying it correctly. In my opinion, if it claims it is callable, it should display a YTW as well. With regards to callable above par, the bond traded below the redemption price of 115.546 ever since 2018, which means that yield to call (yield to extraordinary redemption) would have been above the YTM, making YTM the YTW in any case.
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