Your task is to analyse one of the firms outstanding bonds. First, compute the credit spread of this bond, by comparing the yield-to-maturity on this bond with the yield on Treasury bonds of comparable duration. (For current US treasury yields, go to Yahoo Finance, and type treasury yield.) Second, estimate the bonds price one year from now (assuming that interest rates will remain constant), and comment on the reason behind the expected price change (if any) from the current price of the bond. Finally, provide a credit rating for the firms bonds, based on your analysis of the company bond, and explain why you have given this rating.

Pfizer Inc PFE 7.2% 15-Mar-2039 (717081CY7=) OTC Bonds 133.992 +0.960 (+0.72%) 09/06 - Delayed Data. (Disclaimer) Volume: 0 Bid/Ask: 0.000/0.000 Day's Range: 133.992 - 133.992 Prev. Close Price Open Volume 1-Year Change Day's Range 133.031 N/A N/A - 16.04% 133.992 - 133.992 52 wk Range 130.695 166.352 7.2 Coupon Coupon Frequency Semi - Annual Next Coupon Date N/A Issue Date Mar 24, 2009 Maturity Date Rating Duration Yield Type Mar 15, 2039 N/A 0.03 N/A Fixed Pfizer Inc PFE 7.2% 15-Mar-2039 (717081CY7=) OTC Bonds 133.992 +0.960 (+0.72%) 09/06 - Delayed Data. (Disclaimer) Volume: 0 Bid/Ask: 0.000/0.000 Day's Range: 133.992 - 133.992 Prev. Close Price Open Volume 1-Year Change Day's Range 133.031 N/A N/A - 16.04% 133.992 - 133.992 52 wk Range 130.695 166.352 7.2 Coupon Coupon Frequency Semi - Annual Next Coupon Date N/A Issue Date Mar 24, 2009 Maturity Date Rating Duration Yield Type Mar 15, 2039 N/A 0.03 N/A Fixed