We are entering a "Golden Period" for fixed income investing

[Freedom56]

Here is a short term note from Goldman Sachs that has been dropping below par. The coupon is 5% and matures 6/15/23.

Details
CUSIP 38141E2F5
ISIN US38141E2F51
SEDOL --
Pay Frequency MONTHLY
Coupon 5.000
Maturity Date 06/15/2023
Moody's Rating A2
S&P Rating BBB+

The current order book and recent trades are as per the attached images. This is a nice one to pick at at par or lower during the next market sell-off.

 

[lawman]

Here is a short term note from Goldman Sachs that has been dropping below par. The coupon is 5% and matures 6/15/23.

Details
CUSIP 38141E2F5
ISIN US38141E2F51
SEDOL --
Pay Frequency MONTHLY
Coupon 5.000
Maturity Date 06/15/2023
Moody's Rating A2
S&P Rating BBB+

The current order book and recent trades are as per the attached images. This is a nice one to pick at at par or lower during the next market sell-off.

So to make sure I understand correctly if I bid $100.00 my YTM would be 5%...Is that correct?

 

[Freedom56]

So to make sure I understand correctly if I bid $100.00 my YTM would be 5%...Is that correct?

That is correct and higher if you bid less than $100.

 

[Mulligan]

Hey Mulligan,

The WFC step up note that I see now is 4 year note rated A1/BBB+:

----Date-------CPN APY
08/28/20244.1004.100
08/28/20254.7004.316
08/29/20266.5004.837


Details
CUSIP95001DC99
ISINUS95001DC996
SEDOL--
Pay FrequencySEMI-ANNUALLY
CouponStep-up
Maturity Date08/29/2026
Moody's RatingA1
S&P RatingBBB+
Issuer EventsNO
Survivor OptionNO
Bond TypeCorporate Note
SectorFINANCE (BANK)
Interest Accrual Date08/29/2022

I'm buying some of that.

Yes, Freedom, that is the cusip 95001DC99. My purchase for this one has been accepted but of course not ready to be received yet.
I also have this one from Wells 95001DC73. Its the same 4 year step up 4.05%- 4.75%-5.75%… The above one had slightly better terms.

 

[Born2Fish]

So to make sure I understand correctly if I bid $100.00 my YTM would be 5%...Is that correct?

I can see this (CUSIP 38141E2F5) on finra-morningstar but can't find this on my TDA account.

 

[lawman]

I can see this (CUSIP 38141E2F5) on finra-morningstar but can't find this on my TDA account.

I find that most if not all the good deals that are mentioned here by others are not available through Schwab.

 

[Born2Fish]

I can see this (CUSIP 38141E2F5) on finra-morningstar but can't find this on my TDA account.

I find that most if not all the good deals that are mentioned here by others are not available through Schwab.

Thanks!

I [-]am going to[/-] have moved a chunk of cash from my 401k Stable Value fund to a new Fido tIRA so that I can build up my pre-tax fixed income investments.

 

[savory]

I want to give a shoutout to the folks participating in this stream. The time many of you took, especially Freedom56, has been incredibly helpful to me and much appreciated.

My knowledge and confidence level has been enhanced. I have started to rebuild my portfolio and feel comfortable with my purchases. Especially the ones that have been recommended in the forum.

Thanks again for all your help. And please keep the suggestions and educational information coming.

 

[Freedom56]

I want to give a shoutout to the folks participating in this stream. The time many of you took, especially Freedom56, has been incredibly helpful to me and much appreciated.

My knowledge and confidence level has been enhanced. I have started to rebuild my portfolio and feel comfortable with my purchases. Especially the ones that have been recommended in the forum.

Thanks again for all your help. And please keep the suggestions and educational information coming.

Thanks for the feedback. Hopefully the ideas here on this thread will counter the misinformation spread by the financial industry that bonds are somehow too complex for the individual investor and that they need experienced experts to build and manage portfolios. Nothing could be further from the truth. Bond funds introduce market risk to products where there is none. For those who have been managing their own fixed income portfolios for years understand how easy it really is and when you build your entire income stream from interest income from corporate bonds/notes, treasuries, and CDs, your market is eliminated. Market corrections suddenly become opportunities to boost yields as funds are forced into a "buy high/sell low" mode as they scramble for liquidity.

 

[COcheesehead]

Bonds are just math. Stocks are hope.
If I have a yield to worst, a rating and a price, I can make a good decision.

 

[DuluthGA]

I want to give a shoutout to the folks participating in this stream. The time many of you took, especially Freedom56, has been incredibly helpful to me and much appreciated.

My knowledge and confidence level has been enhanced. I have started to rebuild my portfolio and feel comfortable with my purchases. Especially the ones that have been recommended in the forum.

Thanks again for all your help. And please keep the suggestions and educational information coming.

I 2nd the appreciation and information share. Ive built a small bond ladder for the next 6 years until SSI kicks in as well as a t-bill ladder to up my cash on hand interest. Ive learned to be satisfied with the rate yield to maturity and not care about what the bond price may do in the interim. Thanks!

 

[lawman]

Dittto guys..Gotta run for now..Gotta go find a bond to buy..

 

[aja8888]

I want to give a shoutout to the folks participating in this stream. The time many of you took, especially Freedom56, has been incredibly helpful to me and much appreciated.

My knowledge and confidence level has been enhanced. I have started to rebuild my portfolio and feel comfortable with my purchases. Especially the ones that have been recommended in the forum.

Thanks again for all your help. And please keep the suggestions and educational information coming.

+2

Lots of good advice here. Thanks, Freedom56, for your efforts and wisdom.

 

[Family]

Below Par Purchases

Thank you all - I too have benefited greatly from this Thread hosted by Freedom56!

Question: I see some opportunities to buy lower coupon bonds (0%-3%), but significantly below par, resulting in good YTM & YTW. I am thinking these may be more desirable than high coupon bonds since the "call" risk is lower. Thoughts?

BTW: I would hold to maturity and am purchasing in Roth, so, no capital gains tax.

 

[lawman]

Thank you all - I too have benefited greatly from this Thread hosted by Freedom56!

Question: I see some opportunities to buy lower coupon bonds (0%-3%), but significantly below par, resulting in good YTM & YTW. I am thinking these may be more desirable than high coupon bonds since the "call" risk is lower. Thoughts?

BTW: I would hold to maturity and am purchasing in Roth, so, no capital gains tax.

I just bought Barcly's CUSIP 06748XNQ0..Missed getting it when I first found it but found it available today..I say this just to encourage those who miss getting one they wanted to keep checking back. Not excited to have to go out 4 years but for 5% I'll take the chance..

 

[MarieIG]

+2

Lots of good advice here. Thanks, Freedom56, for your efforts and wisdom.

+3

 

[Phroig]

+3

+4. I haven’t made the leap to buying individual bonds yet, but thanks for sharing your research and expertise.

 

[daylatedollarshort]

Bond funds introduce market risk to products where there is none.

Freedom56 - I also appreciate the bond knowledge you have been sharing here and the way you can explain important concepts about bonds in simple terms, concepts that the mutual fund industry articles often try to obfuscate.

 

[sengsational]

What I like most about this and similar threads are the examples of what's out there. This makes it easy to buy if I find something similar in YTM and rating.

I'm a low stakes guy, since I'm just doing taxable munis for my mom... she really wanted treasuries, but she agreed to munis. But my portfolio is in "tax advantaged" accounts, and those have no access to individual bonds. My alternative is a stable value fund. Thankfully it's one with a pretty good rate history.

 

[Spock]

Bonds are just math. Stocks are hope.
If I have a yield to worst, a rating and a price, I can make a good decision.

side comment:

I'm surprised at all of the big banks (that I've looked at) all have BBB credit ratings, just 1 step above junk.
In a similar twist, only 2 companies (Microsoft and J&J) in the S&P 500 have AAA ratings.
And that is with a ratings system that is suspected of being overly soft/lenient.
With all the $ washing through the system I would have expected banks to be in a lot better shape.

 

[jazz4cash]

What I like most about this and similar threads are the examples of what's out there. This makes it easy to buy if I find something similar in YTM and rating.

I'm a low stakes guy, since I'm just doing taxable munis for my mom... she really wanted treasuries, but she agreed to munis. But my portfolio is in "tax advantaged" accounts, and those have no access to individual bonds. My alternative is a stable value fund. Thankfully it's one with a pretty good rate history.

The term “tax advantaged” is a bit confusing. To me that includes IRAs which can be used to buy all these products. I assume you are using the term for workplace savings like 401k, 403b, TSP, 457 etc. In my case I kept my 401k but did a partial rollover so I could get a better range of fixed income options.

 

[MarieIG]

The term “tax advantaged” is a bit confusing. To me that includes IRAs which can be used to buy all these products. I assume you are using the term for workplace savings like 401k, 403b, TSP, 457 etc. In my case I kept my 401k but did a partial rollover so I could get a better range of fixed income options.

My second to last employer offered the option for a brokerage in their 401k; but each trade was prohibitively expensive. I would have left part of my 401k with my last employer for the stable income fund, but could not stomach the management fee; and the withdrawal fees.

 

[Born2Fish]

I want to give a shoutout to the folks participating in this stream. The time many of you took, especially Freedom56, has been incredibly helpful to me and much appreciated.

My knowledge and confidence level has been enhanced. I have started to rebuild my portfolio and feel comfortable with my purchases. Especially the ones that have been recommended in the forum.

Thanks again for all your help. And please keep the suggestions and educational information coming.

Yes - thanks a ton to Freedom56 and everyone else here who has taken the time to share your knowledge and answer questions.

Freedom - your detailed instructions for searching various websites has been especially appreciated. I have printed out and followed the instructions so many times that now I can enter all the relevant parameters quickly without the instructions.

I just opened a Fidelity rollover IRA account dedicated to fixed income portfolio and have started shopping. I like their website.

 

[COcheesehead]

Thank you all - I too have benefited greatly from this Thread hosted by Freedom56!

Question: I see some opportunities to buy lower coupon bonds (0%-3%), but significantly below par, resulting in good YTM & YTW. I am thinking these may be more desirable than high coupon bonds since the "call" risk is lower. Thoughts?

BTW: I would hold to maturity and am purchasing in Roth, so, no capital gains tax.

If total return is all that is important to you and not regular income, there can be some nice returns with lower coupon bonds.

 

[Freedom56]

Thank you all - I too have benefited greatly from this Thread hosted by Freedom56!

Question: I see some opportunities to buy lower coupon bonds (0%-3%), but significantly below par, resulting in good YTM & YTW. I am thinking these may be more desirable than high coupon bonds since the "call" risk is lower. Thoughts?

BTW: I would hold to maturity and am purchasing in Roth, so, no capital gains tax.

Yes there are opportunities for the lower coupon bonds. Many investors buy them for their IRAs. Funds normally sell those first when it's time to liquidate. They fall pretty hard and fast when funds liquidate them. I would not buy them unless you receive at least a 1-2 points premium to higher coupon issues with similar durations from the same issuer.