I picked up some Charles Schwab notes

[zdreg]

Once traded, it trades with the credit default swap yield curve, which rarely changes for larger companies.

you have an active imagination. Can you prove your assertion?

 

[kmiklas]

I got it via Fidelity. Only a very small amount, rated A- (moody's A2) the peeps who think Schwab is "distressed" is not in their right mind! Fidelity would not sell me Treasures under a 100 lot.

Can you post the CUSIP please? I want to see if it's callable. That's BIG, because if prevailing rates happen to plunge and your bond goes UP in value, they can call it back, stick you with your money, and not pay your interest. This is a risk that must be reflected in the yield.

You see my point, right? To assume the additional risk of a security rated A- when you can have almost the same return from an AAA US Treasury for almost the same return? Especially if it's callable? From this perspective, the Schwab bond is not a rational decision.

The secondary bonds market is Over-the-Counter (OTC)... you're swimming in the ocean, with the sharks, and the stingrays... be careful out there!

Again, none of this is to be take personally. I'm just looking at the numbers.

 

[newwurldmn]

below par is a term describing a bond whose market value is below its face value or principal value, usually 100 but not always. at the time of issuance, market value is the face value or principal value. money made or lost when interest rate changes.

one simply can’t find a a- rated non bank financial with 1 year left with 20% returns, if that’s what considers as compensation to credit risk, the market doesn’t agree with that price.

you said that bankers don't issue bonds below par. That's not true. Bonds are issued below par all the time.

Your second paragraph has nothing to do with a bond trading at, above, or below par.

 

[kmiklas]

Well, since we're sharing...

I've attached a list of our current bond holdings.

@kmiklas Do you think we have any s#!t that we should sell asap before the Fed raises rates?

I'll get back to you. I have to take a closer look. Did you purchase these at issue or on the secondary market?

 

[TimtheEnchanter]

It is callable, but I got out this morning with a whopping $7 loss. The worse yield is including the call function, isn't it? I have $60k in treasury notes too, so this was not a big investment.

 

[kmiklas]

It is callable, but I got out this morning with a whopping $7 loss. The worse yield is including the call function, isn't it? I have $60k in treasury notes too, so this was not a big investment.
View attachment 318716

Phew good! I was worried about you <3

 

[mervyn]

you said that bankers don't issue bonds below par. That's not true. Bonds are issued below par all the time.

Principal Value took in before fees is the par, otherwise any desk can arb the trade at the get go. Issuer lost money and the bankers lost fees due to inefficient pricing.

If you can hold that long, Apple 2049 is trading at 73.567, "whopping" 27% plus near 70% coupon sum, but woulld you buy that?

 

[newwurldmn]

Principal Value took in before fees is the par, otherwise any desk can arb the trade at the get go. Issuer lost money and the bankers lost fees due to inefficient pricing.

If you can hold that long, Apple 2049 is trading at 73.567, "whopping" 27% plus near 70% coupon sum, but woulld you buy that?

Do you understand time value of money?
If so, then how is buying a bond below par an arb?

 

[mervyn]

you have an active imagination. Can you prove your assertion?

In the ideal world, insurance cost for a bond default shall be equal to the bond vs becnhmark spread, lot of papers published back then about efficiency of bond pricing using CDS to mark but not all bonds have their own CDS, adjustments were made using comparables.

 

[mervyn]

Do you understand time value of money?
If so, then how is buying a bond below par an arb?

you forgot the cost of money and the opportunitiy costs. if my borrowing cost is zero or opm, i'd by this darn thing.