QUICK DEFINITION
Yield to Worst is the lowest yield produced by the permitted redemption outcomes of a bond, assuming the issuer does not default.
WHY IT MATTERS
Why Yield to Worst matters in bond markets
It is widely used for callable bonds because the highest-price outcome for the investor may not be the most likely redemption path.
MARKET CONTEXT
How to think about it
Bond investors use yield to worst as part of a wider framework that links prices, yields, cash flows, liquidity and risk. The concept should therefore be read together with its related terms rather than as an isolated definition.
Is Yield to Worst important for fixed-income investors?
← Back to the Bond Market Glossary Yes. It is widely used for callable bonds because the highest-price outcome for the investor may not be the most likely redemption path.