Long Term Stats

Figure 13 shows how the additional yield available on corporate bonds over gilts has varied since 1988, for various bond credit ratings. The spreads have been calculated by differencing the UBS Warburg Over 10 Year Corporate Bond Index (for the relevant bond rating) and the UBS Warburg over 10 year gilt index before 1998, and by differencing the iBoxx over 10 year corporate bond index (for the relevant bond rating) and the iBoxx over 10 year gilt index after 1998.

Figure 14 shows an index of the total returns on AA-rated corporate bonds since 1988 compared to an index of returns on gilts of similar duration. Interest income is assumed to be reinvested in the respective indices. The indices used are the same as those in Figure 13.

Figure 15 gives the percentage increase in the AA corporate bonds index over periods of one, five and 1 0 years, ending in December each year, from 1 990 to 2008. On the left are shown percentage increases in the nominal index. On the right are shown increases in the real index, relative to retail prices. The UBS Warburg Over 10 Year Index is used from 1989 to 1997; the iBoxx Over 1 0 Year Index used thereafter. It should be noted that the two indices are not directly comparable (no iBoxx data is available before 1998).