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What accounts for the difference between treasury bond rates, and corporate bonds?

March 22, 2009 by How Savings Bonds Work  
Filed under More Bonds Answers

Can you answer Scott S’s question about Bonds?:

Specifically regarding US Treasury prices and yields on a 30 yr bond, and a big corporation like GM?

High Yield Corporate Bonds

How Savings Bonds Work

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Comments

3 Responses to “What accounts for the difference between treasury bond rates, and corporate bonds?”

  1. jeff410 on March 25th, 2009 6:08 am

    Bonds Feedback: Default risk

  2. David M on March 28th, 2009 9:34 am

    Bonds Feedback: Risk. GM and other corporations might default on their bonds. It’s nearly impossible for the US to default on their bonds. So corporations need to pay a higher rate.

  3. Ted on March 30th, 2009 4:46 pm

    Bonds Feedback: (1) Risk of paying late or defaulting completely.

    (2) Taxes. US debt is exempt from state and local income taxes, which make them desirable for people in places like California and New York city, where state and local combined can be 12%.

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