Series 53: 6.5.4. Yield To Put

6.5.4. Yield to Put

Yield to put is the yield assuming that you hold the security until its first put date. As for a callable bond, yield to put is generally higher than yield to maturity when the bond is selling at a discount. This is because the shortened maturity reduces the bond’s potential for price depreciation.

Analysts generally use yield to put when a putable bond is priced at a discount and yield to maturity when it is priced at a premium. A discounted bond means that yields are higher in the market, and bondholders are likely to exercise the put option. It is quoted only when the bond is selling at discount.

Remember: Putable bonds are quoted at yield to put for discount bonds and yield to maturity for premium bonds.

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