Dividends4Life: Competing Yields: Goodyear & Cooper Tire

Competing Yields: Goodyear & Cooper Tire

Posted by D4L | Monday, January 21, 2013 | | 0 comments »

Goodyear Tire & Rubber (GT) and Cooper Tire & Rubber (CTB) are competing Ohio-based tire companies. In the late 1990s, each company issued 30-year bonds that currently offer impressive yields. Goodyear has two different types of bonds, the higher yield 2028 bond is rated below their other bonds. Also keep in mind these bonds are highly speculative, based on their credit ratings.

The 2027 Cooper bonds yield 6.9% and are call protected; while Goodyear's 2028 bonds have a make whole call and yield 6.68%. Additionally, the 2019 Cooper bonds trade at a 14% premium, however still yield well over 5%. Goodyear and Cooper are steeped in debt; compared to other junk bonds with similar yields, they have brand names and widely used products. Histories of losses and valuation allowances may make the companies seem stronger than they are, so it is very important to rely on their credit ratings.

Source: Seeking Alpha

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