Yield to Worst

Yield to Worst refers to the lowest yield an investor can receive on a bond without the issuer defaulting. This yield is calculated based on the worst-case scenario, usually the earliest call date or maturity. It is crucial for assessing the potential return of Bonds, especially callable Bonds.

For example, if a callable bond has a yield to maturity of 5% but can be called at 4% in three years, the yield to worst would be 4%. In cases where Interest Rates rise, the bond may be called early, leading to a lower yield for the investor.