The Search For 7% Investment Grade Yields, Part 2: Carlyle And Its Baby Bond

2025-02-20 09:31:28 ET

Summary

• Equity is currently overvalued; we're increasing fixed-income exposure, focusing this time on investment-grade long-duration issues offering 7% yields.
• Carlyle Group, with an A- credit rating, has solid investment-grade debt and a history of consistent dividend payments.
• The Carlyle Group's baby bond, CGABL, offers a higher yield compared to bonds of similar credit quality.
• CGABL remains one of the few investment-grade securities not tightening its credit spread to treasuries, making it a compelling investment.

Co-authored by Relative Value.

Overview

In our recent articles, we have tried to defend the thesis that equity is currently overvalued and is actively increasing our portfolio's fixed-income exposure. Trying to be diverse in our pickings, we have also covered the securities we like the most in articles here in SA. We published quite several articles on different low-duration high-quality vehicles, as well as CEF-issued preferred stocks bearing close to 6% qualified perpetual yields and some of the highest credit scores on the exchange....

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