Yield to Average Life

Yield calculation used, in lieu of Yield to Maturity or Yield to Call where bonds are retired systematically during the life of the issue, as in the case of a Sinking Fund with contractual requirements. Because the issuer will buy its own bonds on the open market to satisfy its sinking fund requirements if the bonds are trading below Par, there is to that extent automatic price support for such bonds; they therefore tend to trade on a yield-to-average-life basis.