CREDIT CONDITIONS AND PRICE DETERMINATION IN THE CORPORATE BOND MARKET.

The article addresses the yield differential in the corporate bond market. The author refers to a study of changing credit conditions in the bond market, as well as the relationship between bond prices and interest rates from 1900-1944. This paper seeks to address price-making in the corporate bond market since January, 1955. The author cites Moody's Investors Service index as a primary data source of new and seasoned bond yields. The author discusses the behavior of corporate bond yields, the nature, construction, and limitations of Moody's indexes of corporate bond yields, and presents an explanation of the differential between yields on newly issued and seasoned corporate bonds.