Corporate debt is traded mostly in the over the counter (OTC) market. There are also bond trades and selling on the NYSE (New York Stock Exchange).
NASDAQ quotes convertible corporate bonds since they are similar to stocks and equities, but they do not quote non convertible corporates.
Round lot trades of bonds is 5 $1000 par bonds = $5000
Yellow Sheets - Bond dealers get printed offering quotes for corporate bonds in the yellow sheets, which are printed daily. There are electronic pricing services as well.
Bloomberg and TRACE. TRACE offers real time reporting of corporate bond trades.
Commercial Paper is sold OTC through dealers and can also be bought through the issuing corporation.
Corporate bonds settle trade day plus 3 business days T+3 for buying and selling.
Regular was trading is trade date plus 3 business days.
"When Issued"
When a corporation announces it will sell new securities. The exchanges will allow trading in the bonds before they exist. If the issue never comes out or sells, then the trades are canceled.
Bond Trading Yield
Monday, January 21, 2008
Wednesday, January 2, 2008
Junk Bond - Junk Notes
Corporate bonds that are rated below investment grade are considered junk or speculative. Standard and Poors and Moodys are 2 rating agencies that will rate the credit quality of corporate notes and bonds.
A bond that has a rating of below Baa/BBB are considered speculative. The reality is over 95% of these securities pay off fine, but because of their junk rating (pretty strong word), they will offer a higher yield or rate of return. So, the majority of investors buying these bonds will earn more money than investors who only buy AAA or high rated corporate bonds and notes.
There are domestic and foreign issues of speculative bonds. Some of these securities are also callable and/or convertible. A callable junk bond will have a set call date that the issuer can redeem the bonds back early at. There will be a set call price on these securities as well. Normally a junk bond is called when interest rates have declined to a certain level. Thus, the investor will get their money back when interest rates are low. Callable bonds will have a higher yield than non callbale bonds if the quality is the same and the maturity is as well.
Convertible junk bonds are securities where the investor can convert into common stock of the issuing corporation.
Convertible Bonds
Subordinated Debentures
A bond that has a rating of below Baa/BBB are considered speculative. The reality is over 95% of these securities pay off fine, but because of their junk rating (pretty strong word), they will offer a higher yield or rate of return. So, the majority of investors buying these bonds will earn more money than investors who only buy AAA or high rated corporate bonds and notes.
There are domestic and foreign issues of speculative bonds. Some of these securities are also callable and/or convertible. A callable junk bond will have a set call date that the issuer can redeem the bonds back early at. There will be a set call price on these securities as well. Normally a junk bond is called when interest rates have declined to a certain level. Thus, the investor will get their money back when interest rates are low. Callable bonds will have a higher yield than non callbale bonds if the quality is the same and the maturity is as well.
Convertible junk bonds are securities where the investor can convert into common stock of the issuing corporation.
Convertible Bonds
Subordinated Debentures
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