What Is Yield to Worst (YTW)?

The yield to worst is a measure of the lowest possible yield on a bond that functions completely within the terms of its contract without defaulting. When a bond includes provisions that allow the issuer to close it out before it matures, it is referred to as a kind of yield. The bond’s early retirement might be triggered by a number of conditions stated in the bond’s prospectus. The yield to worst measure is intended to assess the worst-case yield scenario at the earliest possible retirement date. YTW assists investors in risk management and ensuring that particular income requirements are satisfied even in the worst-case circumstances.