Yields

What types of yield should investors be aware of?

Yield to Maturity is sometimes referred to as “Gross Redemption Yield” or simply “Redemption Yield”.

What is the difference between yield and coupon rate?

When a Eurobond is issued the issuer will pay a coupon rate over the nominal amount of the bond. A coupon rate is similar to the interest rate a lender charges the borrower for a loan.

Coupon rates can take various shapes. This rate will not change over the life of the Eurobond unless the coupon is variable or has a complex structure.

A bond issued at 100% (par) will have a yield to maturity equal to its coupon rate. A higher price than par will mean a lower yield and vice versa.