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I was over at www.Bondspage.com and looking up some corporate bonds. I was looking up

LEHMAN BROS HLDGS INC MTN BE

under corporates, using the criteria of
rating A/A --- Aaa/AAA
Callable
Yield 7+

Well it came up with a price of $3.391 and under its first Call date it says it has a price of $13.987 for 2/10/03 and a yield to call is 2123%

This does not make much sense to me, and I cannot begin to research whats going on in order to learn. I wanted to see if I could post the information to see if anyone knew what to say about this one.

any takers? If you need more info, i can grab it from the page.



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It looks like this is a long-term zero coupon bond, maturing in 2028, which explains the low price.

Still, I'm wondering about this stated yield on an A-rated bond. It *looks* like it sells for 3.391 and can be called for 13.987 on 2/10/2003. That's a yield to call of 2,123% when you consider that there's about a 300% yield for holding it two months. Again, this is totally inconsistent with an A-rated bond.

I'd be interested to hear anyone who knows more about this bond, and why its yield is reportedly so high (or if the pricing is a typo).

#29
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Well it came up with a price of $3.391 and under its first Call date it says it has a price of $13.987 for 2/10/03 and a yield to call is 2123%

This does not make much sense to me, and I cannot begin to research whats going on in order to learn. I wanted to see if I could post the information to see if anyone knew what to say about this one.


Calls are exercised at the option of the bond issuer. Yield to call is meaningless if the company chooses not to exercise the call, since there is no way to actually obtain that yield. A large discount to call price (and hence high yield to call) may result if the markets do not believe the call will be exercised.

More likely, however, is that the price is simply incorrect. Nothing of any reasonable quality should be selling for under $4, not even 30-year zeros. What makes more sense is if the price were $13.391, rather than $3.391.
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It looks like this is a long-term zero coupon bond, maturing in 2028, which explains the low price.

A 26-year zero priced at 3.391 has a yield to maturity of about 13.2%. The price is surely a mistake.
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