Corporate and Agency GSE Bond DEALS and NEW ISSUES

[Graybeard]

Best bet is not to buy something you are not planning to hold to maturity. In other cases I would look at funds due to convenience and liquidity.

Agencies from what I have seen on YT seldom mature and typically are called but I would think that may change if they were bought at a lower coupon and rates rise. I don't like bond funds.

 

[Graybeard]

I feel for you, I pulled a lot out of ML because they also didn't offer new issues and their secondary was trivial too.

You probably want to do some more reading on how these work.

With regard to taxable bonds (agency is just one category), a "discount" isn't a significant deciding factor me (although nice to have more money now for other purchases AND it guarantees some amount of your interest for callables).....but I focus on Yield to Worst (for me 5.45% and higher right now), Call Date (love non-callable but rare in Agencies, generally looking for at least 3 years+ out call, longer better, and minimal risk to any premium paid), Rating (A- and higher), Company, and my use case (pure gain or income; timeframe when I may need the funds back). So once you know the terms, you then have to apply it to your situation.

I haven't found Agency secondary market to be any different from corporates or munis - you may lose a quarter point (0.25%) or a little more off market rates to get a buyer, but I have never gotten zero bids.

Good luck!!!

What sources would you suggest for reading... reading that is understandable?

OK so discounted price isn't a major metric, just don't buy above 100 I would think is something to adhere to.

I doubt I would find non callable on Vanguard, the supply is limited right now but never having looked at agencies before maybe this is normal at Vanguard. I don't see a time where I would need the money back, with RMDs in addition to a pension and SS I have way more income than I need. I'm just looking for a "better" return ie interest rate now that T bills are dropping. If the 10 year Treasury would get to 5%+ that probably would be my choice in my IRA as I could sell some if need be, the market for agencies from what I have learned is thin.

 

[Flieger]

Wanting to put about $250k from Fidelity IRA into something earning around 5% for the next 1+ years as the SPAXX is dropping. Any suggestions appreciated.

Is there a reason to do Bonds (of whatever ilk) over CD's (assuming one could get ~5%) CD? TIA.

Flieger

 

[wolf]

What sources would you suggest for reading... reading that is understandable?

OK so discounted price isn't a major metric, just don't buy above 100 I would think is something to adhere to.

I doubt I would find non callable on Vanguard, the supply is limited right now but never having looked at agencies before maybe this is normal at Vanguard. I don't see a time where I would need the money back, with RMDs in addition to a pension and SS I have way more income than I need. I'm just looking for a "better" return ie interest rate now that T bills are dropping. If the 10 year Treasury would get to 5%+ that probably would be my choice in my IRA as I could sell some if need be, the market for agencies from what I have learned is thin.

I'm in same situation as you. Recommend you check out this "you tube" site.

@DiamondNestEgg. This Asian lady, covers many topics. She has podcasts. How to buy Agency on Vanguard. (also, Fidelity and Schwab). Step by step instructions and explanations.

As mentioned. Vanguard, Agency, does not sell new issues. And Charges a $1 commission per $1000.
Can be confusing. (I'm still figuring it out).

Buying new callable Agency/Corporates on Fidelity and Schwab so much easier. I know what I am paying,
Call dates, Maturity dates, and coupon rates, very understandable.

Good Luck.

Again, Watch a bunch of "Diamond Nest Egg " podcasts. She explains a lot.

 

[imbatman]

Wanting to put about $250k from Fidelity IRA into something earning around 5% for the next 1+ years as the SPAXX is dropping. Any suggestions appreciated.

Is there a reason to do Bonds (of whatever ilk) over CD's (assuming one could get ~5%) CD? TIA.

Flieger

I assume you are looking for low-risk and income.

New CDs are too low rate for my liking.

Right now on Fido, you can get new Agencies at 5.19% (FFCB 3133ERVW8, first call Oct 2025) and 5.125% (FHLB 3130B2ZW8, first call Oct 2025). Both are 15-year so in the unlikely scenario rates go back up, they may not be called and you would be holding or sell on secondary if you wanted.

You can also hunt for taxable municipals (I do this a lot) on secondary (they do come a few times a month as Fido New Issues too) as they are mostly A and higher and have longer first call dates.....but watch out for extraordinary redemptions and paying too much over face amount.

I am also holding some WIW CEF (8.18%), as well as BBN CEF (6.32%) but have had them for a good while and they are up 10%+ in price alone for me.....and CEFs are a whole other topic.

Also for kicks, this site is great for seeing money market rates at different brokers:

Fun with money market funds

Find the best money market fund for your needs with our comprehensive list of all available funds. Compare current returns, holdings, and brokerage availability to find the perfect fund for your short-term investment goals.

moneymarket.fun

 

[calmloki]

...

Right now on Fido, you can get new Agencies at 5.19% (FFCB 3133ERVW8, first call Oct 2025) and 5.125% (FHLB 3130B2ZW8, first call Oct 2025). Both are 15-year so in the unlikely scenario rates go back up, they may not be called and you would be holding or sell on secondary if you wanted.
....

Hah! Just ordered my first Agency bond, came here to question more (Ready, Fire, Aim), and lo & behold you mention the one I ordered, 3130B2ZW8. We are with Fidelity more and more, had just spoken with the Fido rep yesterday regarding any potential promo for moving a substantial sum and placed a move request for stocks, ETF, and mutuals at Vg. The rep hooked me up with a bonus and was pitching stretching our maturities with a bond fund (we mostly have Treasuries at Fido, all under 6 months, and hadn't rolled over the last few that matured, electing to keep them in FZDXX in case the stock market went on sale). Not a fan of bond funds, per reading here, not a fan of secondary buying because I like simple.

We are paying substantial state taxes to California, state tax free is a big motivator, thus T-bills and now some Agencies. The continuously callable feature next to first call date 10/17/25 was causing some disagreement on the home front over the meaning of "or". The Fido rep agreed that it couldn't be called before 10/17/25 and you agree. Whew!

Haven't worked out how to show the new agencies sorted by first possible call date, so just sorted by new issues, highest yield, and clicked my way down opening the call schedule and looking for longer first call dates. looks like I missed the 5.19% 10/3/25 bond clicking back and forth.

 

[Montecfo]

Agencies from what I have seen on YT seldom mature and typically are called but I would think that may change if they were bought at a lower coupon and rates rise. I don't like bond funds.

Agency bonds are not always callable. In fact the ones I have bought have not been. One just matured in fact.

Current market conditions have been trying to teach us to expect this. But market conditions are changing.

 

[Flieger]

I assume you are looking for low-risk and income.

New CDs are too low rate for my liking.

Right now on Fido, you can get new Agencies at 5.19% (FFCB 3133ERVW8, first call Oct 2025) and 5.125% (FHLB 3130B2ZW8, first call Oct 2025). Both are 15-year so in the unlikely scenario rates go back up, they may not be called and you would be holding or sell on secondary if you wanted.

You can also hunt for taxable municipals (I do this a lot) on secondary (they do come a few times a month as Fido New Issues too) as they are mostly A and higher and have longer first call dates.....but watch out for extraordinary redemptions and paying too much over face amount.

I am also holding some WIW CEF (8.18%), as well as BBN CEF (6.32%) but have had them for a good while and they are up 10%+ in price alone for me.....and CEFs are a whole other topic.

Also for kicks, this site is great for seeing money market rates at different brokers:

Fun with money market funds

Find the best money market fund for your needs with our comprehensive list of all available funds. Compare current returns, holdings, and brokerage availability to find the perfect fund for your short-term investment goals.

moneymarket.fun

Thanks, I'll take a look! Do this pay annually? Do you sell on secondary if you want to get out 2-3 years in?

Flieger

 

[imbatman]

Thanks, I'll take a look! Do this pay annually? Do you sell on secondary if you want to get out 2-3 years in?

Flieger

Not sure which one you are referring to.........really all bonds of any kind pay twice a year (I have never seen different). The two CEFs I referenced pay monthly. Yes, these bonds can be sold on secondary....you may have to get bids (on Fido) and usually a little below the bid/ask prices because usually dealers buying to resale at a profit. But usually it isn't too far off, I have sold probably 7-8 this year and happy with results.

 

[Graybeard]

Wanting to put about $250k from Fidelity IRA into something earning around 5% for the next 1+ years as the SPAXX is dropping. Any suggestions appreciated.

Is there a reason to do Bonds (of whatever ilk) over CD's (assuming one could get ~5%) CD? TIA.

Flieger

In a taxable account treasuries are not subject to state income tax. The same is true for Federal Home Loan Bank, Federal Farm Credit Bank and Tenn Valley Authority agency bonds. Sometimes CDs have less or more competitive rates.

 

[Graybeard]

I'm in same situation as you. Recommend you check out this "you tube" site.

@DiamondNestEgg. This Asian lady, covers many topics. She has podcasts. How to buy Agency on Vanguard. (also, Fidelity and Schwab). Step by step instructions and explanations.

As mentioned. Vanguard, Agency, does not sell new issues. And Charges a $1 commission per $1000.
Can be confusing. (I'm still figuring it out).

Buying new callable Agency/Corporates on Fidelity and Schwab so much easier. I know what I am paying,
Call dates, Maturity dates, and coupon rates, very understandable.

Good Luck.

Again, Watch a bunch of "Diamond Nest Egg " podcasts. She explains a lot.

The reason I am interested in agency bonds is Jennifer's YT channel. She explains things really well but her video on buying agency bonds a month ago was at Fido. I followed her reasons for selecting or not selecting different bonds but then she lost me towards the end. My problem is I don't know how to compare 1 agency bond to another ie what to look for when analyzing them online so right now I am not buying anything. I really don't want to move money from my taxable account at Vanguard to Fido and have money at 2 different places so I am resisting that and am stuck with Vanguard.

 

[Graybeard]

Right now Vanguard has Federal Home Ln Mtg Corp Callable 01/25@100 for 5.55% YTW 5.547% matures 2044 but that agency is not state tax exempt. The next best is Federal Home Loan Bank Callable 06/25@100 for 5.69% matures 2038 YTW is 4.823% and is state tax exempt. Without logging in I don't know the CUSIPs. So Vanguard is showing new entries on the secondary market day by day.

 

[DuluthGA]

I am also holding some WIW CEF (8.18%), as well as BBN CEF (6.32%) but have had them for a good while and they are up 10%+ in price alone for me.....and CEFs are a whole other topic.

I’ve done well with the WDI CEF (13.4%). I believe it’s the same group as WIW. WDI was trading a discount to NAV but recent run up in share price has about erased that. Looks like WIW is trading with a nice discount and could up their distribution some to more in line with WDI. (If I understand that correctly

 

[Montecfo]

Bonds down on stronger than expected jobs report.

This could be one of those interim buy opportunities.

 

[imbatman]

I’ve done well with the WDI CEF (13.4%). I believe it’s the same group as WIW. WDI was trading a discount to NAV but recent run up in share price has about erased that. Looks like WIW is trading with a nice discount and could up their distribution some to more in line with WDI. (If I understand that correctly

WIW is trading at a discount...and that is a nice safety buffer for your investment.....but the weird quirk of of CEFs is researching if they ALWAYS trade at a discount (also can look at z-score)....and WIW is currently -12.57, but the 5-year average is -12.45...so pretty much even in my book and I am just trolling for the 8.22% dividend but do start thinking of an exit position so I don't start losing principal when/if it starts trending back to its average discount.

 

[Montecfo]

WIW is trading at a discount...and that is a nice safety buffer for your investment.....but the weird quirk of of CEFs is researching if they ALWAYS trade at a discount (also can look at z-score)....and WIW is currently -12.57, but the 5-year average is -12.45...so pretty much even in my book and I am just trolling for the 8.22% dividend but do start thinking of an exit position so I don't start losing principal when/if it starts trending back to its average discount.

They often trade at discount, but not always. In fact certain well performing issues are usually at a premium-even a wide one.

One key is buying at deep discount and selling at par or premium.

 

[Phroig]

On CEFConnect, you can look up Z-scores, which tell you how high/low the current discount or premium is relative to a historical average.

 

[imbatman]

For those looking for very SHORT-TERM investment.....new on Fido this morning....3130B34F7 agency FHLB 5.75% 20-year (but first call Jan 3rd 2025, very likely exercised) and will start earning October 8th

 

[pb4uski]

"very likely exercised"

Pure speculation. How does one acquire such knowledge? Inside knowledge or just pure speculation. I'm guessing the latter.

In my experience, calls are pretty random. I have 7 callable agency positions between 5-6% coupons, including a 6% coupon that has yet to be called.

 

[imbatman]

meh, I love snarky sarcasm with my coffee....regardless, they CAN call it January and if your coupon is higher than the market rate, it increases your risk of being selected (perhaps among other factors)....do with that what you will....I'm not really doing monthly plays at this point and more looking to lock in years

 

[pb4uski]

Ditto on the last part. If you ever detect a reliable pattern or attribute to what these agencies are calling, let me know.

I once had a new agency issue called after one month, but higher coupon issues from the same agency were not called.

 

[Montecfo]

Ditto on the last part. If you ever detect a reliable pattern or attribute to what these agencies are calling, let me know.

I once had a new agency issue called after one month, but higher coupon issues from the same agency were not called.

Someone must understand why this happens. It is curious for sure.

I guess PB4 you kind of feel you have broken the code. If it is random I wonder what the call % is and typical life from first call date to actual call date or percentage of original maturity.

 

[Spock]

For those looking for very SHORT-TERM investment.....new on Fido this morning....3130B34F7 agency FHLB 5.75% 20-year (but first call Jan 3rd 2025, very likely exercised) and will start earning October 8th

I'm up to 32 bonds (90% agencies) called since July 19. Average days from buy to call (mostly new issue) is 254.9 days/8.5months. Average span from call date to maturity date is 1553.6 days/51.8months.
Weighted average of coupon rate is 5.5% with a min of 5.15%.
I don't have any "surprised it wasn't called" issues in my inventory.
So I'd agree that your 5.75% agency has a high likelihood of being called.

 

[pb4uski]

Someone must understand why this happens. It is curious for sure.

I guess PB4 you kind of feel you have broken the code. If it is random I wonder what the call % is and typical life from first call date to actual call date or percentage of original maturity.

Nah, I don't feel like I have broken the code at all. From everythng that I have observed, the calls seem pretty random. They'll sometimes call one bond but leave another on with a similiar or even high coupon outstanding.

I realize that these may all get put back to me at some point and if they do, c'est la vie.

 

[Montecfo]

I'm up to 32 bonds (90% agencies) called since July 19. Average days from buy to call (mostly new issue) is 254.9 days/8.5months. Average span from call date to maturity date is 1553.6 days/51.8months.
Weighted average of coupon rate is 5.5% with a min of 5.15%.
I don't have any "surprised it wasn't called" issues in my inventory.
So I'd agree that your 5.75% agency has a high likelihood of being called.

This is more like what I would expect. It is cautionary for sure.