From Citigroup to McDonald’s: which bonds Freedom included in a conservative portfolio

Freedom added 20 USD-denominated issues to its conservative model portfolio, including bonds from Citigroup (C), Marriott International (MAR), Airbnb (ABNB) and McDonald’s (MCD). Based on indicative quotes as of early October, the average estimated yield to maturity is about 5.42% per annum. Each issue accounts for 5% of the portfolio, and maturities fall in 2027–2030. 

How the conservative portfolio is structured

The model portfolio reflects analysts’ investment ideas and serves as a reference point for clients. Its structure and changes show analysts’ preferences for specific sectors and assets.

The average time to maturity is 2.69 years, and duration is 2.47 years. Duration shows how sensitive bond prices are to changes in market yields: the higher it is, the more strongly a bond’s price typically changes for a comparable move in rates.

What terms well-known issuers offer

The portfolio includes Citigroup bonds maturing in July 2028, with a 4.125% coupon and an estimated yield to maturity of 5.33% per annum. The Marriott International issue matures in October 2028: the coupon is 5.55% and the yield is 5.25%.

For Airbnb bonds maturing in March 2029, these figures are 4.4% and 5.34%, respectively. McDonald’s notes mature in July 2030, feature a 3.6% coupon, and offer a yield to maturity of about 5.40%.

Coupon and yield to maturity differ. The coupon determines the size of regular payments relative to par value. Yield to maturity additionally takes into account the purchase price and repayment of par. For example, McDonald’s bonds with a 3.6% coupon are offered at about 93.99% of par, so their estimated yield to maturity is higher—around 5.40%.

Citigroup grows profit and its deposit base

Citigroup is a global financial group operating in corporate and investment banking, financial markets, and private client services. In a July review, Freedom analysts noted that the bank is gradually moving from restructuring to steady profit growth and improving efficiency.

In Q2, Citigroup’s revenue increased by 14% year on year to nearly $24.77 bn, and net profit rose by 45% to $5.8 bn. The loan portfolio grew by 9% to $794 bn, while deposits increased by 10% to about $1.5 tn. The efficiency ratio, which reflects operating expenses as a share of revenue, improved from 62.7% to 57.4%. Analysts attributed the strong results to growth in both interest and non-interest income.

Marriott and Airbnb maintain revenue growth

Marriott International operates hotel brands and develops its hotel management and franchising business. In Q2, its revenue rose by 5% to $7.07 bn, although it came in below market expectations of $7.19 bn. Net profit totaled $766 mn versus $763 mn a year earlier.

Revenue per available room—one of the key metrics in the hotel business—grew by 3.4%. The company raised its full-year earnings-per-share guidance and the expected growth of that metric.

The accommodation-booking platform Airbnb showed faster growth. Its quarterly revenue increased by 16.8% to $3.61 bn, and net profit rose from $642 mn to $816 mn. Gross booking value grew by 16% to $27.2 bn. Revenue and earnings per share beat market expectations.

McDonald’s maintains high profitability

McDonald’s operates a global restaurant network, most of which runs under a franchising model. In an August review, Freedom Broker highlighted the business’s high profitability while also noting a slowdown in comparable sales.

In Q2, the company’s revenue grew by 3.7% to $7.1 bn, and net profit increased by 5% to $2.36 bn. Adjusted operating margin was 47.8%. At the same time, global comparable sales rose by only 1.3%, and the company pushed back its target of 50,000 restaurants from 2027 to 2028.

According to analysts, network expansion and the development of digital services remain important for medium-term performance, but weak consumer momentum is limiting near-term prospects.

Not an individual investment recommendation.