Bonds 5: Where to find information about bonds

Susan
By Susan June 27, 2012 10:59

Bonds 5: Where to find information about bonds

 

In the previous post we took the example of a German bond maturing in 2020 – it had a 3.25% coupon, it was selling at 116.948 and its yield was 0.918%. Now where did I come up with an example like this? I didn’t make it up – I looked it up.

 

And where do you find that kind of information about bonds? That’s what I want to show you in this post.

 

 

How to read a bonds table

 

First, you could have a look at the documents that are released by government agencies, listing their bonds outstanding.

 

Just a quick note about vocabulary: a bond is called a bond when it has over ten years to maturity. When it is less than ten years away from its maturity date, it’s called a note, and when it’s less than one year to maturity, it’s called a bill.

 

So a 2013 Irish bond was a bond when it was issued in 2002; from 2004 it was called a note, and now, with less than one year to maturity, it’s called a bill.

 

 

This bonds table, available on the NTMA’s website, lists each bond issued by the Irish government, outstanding as of today (that is, this post is based on the document available on Wednesday, June 27, but if you look it up at a later date, the document will have been updated).

 

From left to right, you can read different characteristics of the bond: first its coupon, then its name, then its ISIN. The ISIN is a number that identifies the bond and it’s that number you would quote to a broker when buying or selling the bond. Then comes the maturity date, and then the Irish Stock Exchange closing price.

 

On Tuesday, June 26, the first bond listed in the document, the 2013 Irish Treasury bond with a 5.0% coupon, was trading at a premium: its price on the Irish Stock Exchange (ISE) was 100.49.

 

As a result, its yield to maturity, at 4.33%, was lower than the coupon, since the premium price means somebody buying that bond would take a capital loss, eating into their return.

 

On the contrary, the 2019 Irish Treasury bonds with a 5.9% coupon was trading at a discount (closing price of 93.77), so its yield to maturity was higher than the coupon at 7.01%. The capital gain that somebody buying the bond would make is factored into the yield.

 

And finally the last column shows the amount outstanding for a given bond.

 

Note that on this page of the NTMA website, you can access more information about a given bond, by clicking on “View more”: you will access that bond’s offering circular, or prospectus, a document that lists the characteristics of the bond when it was issued.

 

 

What you see on Bloomberg

 

You must have heard of Bloomberg, an authoritative source on financial markets. Their website is a wealth of information, both on stocks, bonds and other securities, and on world news that affect financial markets.

 

You can find detailed information about bonds (government bonds and corporate bonds) on their bonds page: click Market Data > Rates and Bonds.

 

There you will find government bonds listed by country (USA, UK, Germany, Japan, Hong Kong, Australia and Brazil) and, for each country, by time to maturity.

 

The bonds that mature first come first in the list: you will notice that they’re listed as “3-Month, 6-Month, 1-Year, 2-Year” etc. Then the following columns have the coupon, the exact maturity date, the selling price (the “ask” or “offer” price) and the yield. The table also lists price changes and the time at which the information was captured.

 


 

What you see on Investing in Bonds Europe

 

Another excellent source of detailed information about bonds is Investing in Bonds Europe. That is where I found the data on the 2020 German bond I analysed in that post.

 

On the Home page, in the left sidebar, click on “Governments”, just below “Markets”. Below a short article about government bonds, you will find a link to “Government Markets In-Depth”.

 

When you click this link, you will be taken to a search page, where you can specify a country or a maturity date to start looking for a bond; you can also click on “Display all European Government Bonds”.

 

To find the 2020 German bond I used as an example previously, just choose “Germany” in the drop-down menu “Issuing country” and “2020” in the caption “Maturity date”. You will be led to a page that lists all German bonds outstanding, maturing in 2020. The 3.25 2020 German bond (or, more accurately, note) is the first one on the list.

 


You see that Investing in Bonds also lists the issue date, rating agencies’ ratings when they are available, and both bid and ask prices.

 

The “bid” price is the price at which a bondholder can sell a bond, and the “ask” (or “offer”) price is the price at which a bondholder can buy a bond. This makes sense when you think that you are “asking” for a bond when you want to buy it and are taking “bids” from other interested parties when you want to sell the bond.

 

If you are thinking of investing in bonds, you could do worse than bookmark those websites

 

Are you on the list?

Sign up for my monthly newsletter and get more content like this, learn about business opportunities, and never miss my Savvy podcast.

 
Previous post: Bonds 4: “Does it make any sense to buy a bond at a premium?”

Next post: Bonds 6: Duration – Yes, you do need to know about it!

Facebooktwittergoogle_pluslinkedin
Susan
By Susan June 27, 2012 10:59