Analyzing the 10-Year Treasury and MLP Yields Spread
Generally, MLP yields move in the same direction as Treasury yields in the long term. MLP yields trade at a spread over Treasuries.
By Rekha Khandelwal, CFA
June 13 2016, Updated 9:06 a.m. ET
MLP and Treasury yield
Generally, MLP yields move in the same direction as Treasury yields in the long term. MLP yields trade at a spread over Treasuries. Investors expect a risk premium for the additional risk undertaken over risk-free Treasuries.
A decline in Treasury yields means cheaper capital availability in order for an MLP to fuel growth. The above graph compares MLP yields, represented by the Alerian MLP Infrastructure Index (AMZI), and ten-year Treasury yields over the last 20 years.
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