Yield to Worst

By blake@blakehowe.com

Yield to Worst

The lowest potential yield that can be received without the issuer defaulting. The yield to worst is calculated by making worst-case scenario assumptions on the issue by calculating the returns that would be received if certain provisions, including for example prepayment provisions, are used by the issuer. This metric is used to evaluate the worst-case scenario for yield to help investors manage risks and ensure that specific income requirements will still be met even in the worst scenarios.