Corporate and Agency GSE Bond DEALS and NEW ISSUES

jldavid47 said:
FWIW, I'm not upset or concerned about my agency bonds getting called. I went into the trade with my eyes wide open. There are still plenty of opportunities out there.
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+1 Had a 6.5% called recently that didn't live long but at the same time I didn't really expect it to when I bought it but you never know.
 
Just learned something new today WRT Fidelity online bond purchases. New in the last few weeks, I have seen orders get cancelled a few minutes after placing them, even if day orders placed in the morning. Today I had 2 orders (muni bonds) do that, so placed them again only to have them cancelled again. Mind you, they already passed the system parameter screen and were not worlds away from the ask price ($99.20 for $99.90 and $108.0 for $109.0).

So I called the Fixed Income line and they explained that their bond market doesn't work like stock trades and that the bond desk is actively reviewing online orders and calling other dealers trying to find matches. So if the bond desk sees a bid from me that they don't think they can work on (even though it passed the system price limits), they will manually cancel my order to remove it from their queue.

I find this pretty incredible on the volume Fidelity must be working, and frankly, not helpful for me either because now I have no idea what they feel is an "acceptable" bid price. Should I continuously place $0.10 increment bids until they stop cancelling them? Seems unproductive for both of us. I gave this feedback to the agent, and he said really we should not be bidding like stocks and should just take offered amounts or not.

Anyone ever heard this BS before or am I just out of touch?
 
imbatman said:
Just learned something new today WRT Fidelity online bond purchases. New in the last few weeks, I have seen orders get cancelled a few minutes after placing them, even if day orders placed in the morning. Today I had 2 orders (muni bonds) do that, so placed them again only to have them cancelled again. Mind you, they already passed the system parameter screen and were not worlds away from the ask price ($99.20 for $99.90 and $108.0 for $109.0).

So I called the Fixed Income line and they explained that their bond market doesn't work like stock trades and that the bond desk is actively reviewing online orders and calling other dealers trying to find matches. So if the bond desk sees a bid from me that they don't think they can work on (even though it passed the system price limits), they will manually cancel my order to remove it from their queue.

I find this pretty incredible on the volume Fidelity must be working, and frankly, not helpful for me either because now I have no idea what they feel is an "acceptable" bid price. Should I continuously place $0.10 increment bids until they stop cancelling them? Seems unproductive for both of us. I gave this feedback to the agent, and he said really we should not be bidding like stocks and should just take offered amounts or not.

Anyone ever heard this BS before or am I just out of touch?
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Happens to me a lot. One way to minimize it is enter the order for the day, not as a fill or kill. Doesn’t mean you’ll get it, but sellers can see your bid for longer.
I don’t take it as BS. I just enter the order again until I get it or move onto to another bond. Some days are worse than others. Right now bond activity is high. It’s the way the bond market works.
 
Good to know it isn't just me ha ha. Yes, I enter all my orders as "day" and rarely use "fill or kill" so that wasn't the situation here either.
 
A day order usually gets cancelled at the end of the trading day. A fill or kill will get cancelled within minutes.
 
That is why I called, I couldn't understand why particular day orders kept getting cancelled no matter how many times I placed them. Just never occurred to me a person was manually looking at my online bond orders.
 
I just replaced my called 6.58% FFCB with a 6.3% FFCB issued earlier in December. I got it for par. It's callable, and will most likely get called, in March 24.
I don't see much in Fidelity's FI inventory I like. The 6%+ yielders are mostly real estate/regional banks/BDCs with the odd GM and Verizon. In the 5.5-6% range, there are Canadian banks, C, USB; I already have those and don't want to add more.
 
Sounds like you are looking for taxable? What about taxable munis? Nothing amazing there right now but maybe something to fill out your diversity a little.

Ex. 447637AA7 Huron Ohio 6.38% A1 30-year, first call March 2027 (it is not GO but special obligation for a convention center upgrade)
 
COcheesehead said:
I have been adding to two bond CEFs, PAXS and WDI. Both paying 12% plus. Both in the black for me YTD, both earning more than their distribution and earnings are increasing. These are less than 5% of my fixed income, but generate about 15% of my cashflow.
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Hello, thanks for the info, are those stock symbol WDI, PAXS and CEF? Why do these investment so high yield and attractive for you to buy? And what is the con for investing in these?
 
JC888 said:
Hello, thanks for the info, are those stock symbol WDI, PAXS and CEF? Why do these investment so high yield and attractive for you to buy? And what is the con for investing in these?
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The symbols are WDI and PAXS. CEF = closed end fund. The yield is high because they are leveraged and can be very volatile. When they are good, they are really good. When they are bad they are really bad. That is the pro and con of leverage.
WDI is the most attractive right now to me. It’s selling at a 9% discount. It pays 12.5% yield, but the fund is earning 103% of that payment and the earnings are increasing. The fund also just increased the dividend in November and has 30 cents a share in undistributed income. The sponsor has it built for a long term holding.
Bond like CEFs are risky and I devote less than 5% of my fixed income to them, though they produce 15% of my cashflow. Buyer beware on anything you don’t fully understand.
 
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imbatman is right that bond trading is not like trading common stocks.



Individual Muni bond trading (secondary market) can be even more disorganized. I've found sometimes these folks even leave their desks early before the 'trading session' is over. Couple months ago I had an afternoon-placed order shown as accepted, then next day found it was not filled. No explanation- just 'lost' ?!? Interestingly a couple trading days later the exact same bond came up...at a lower price than my initial order they ignored/lost/whatever.
 
Yes, I am more muni secondary too so this was very enlightening for me - learning that behind my fancy computer GUI that I took for a modern transactional system.....were actually hamsters and cogs still being moved around manually when they felt like doing it.

This finally turned the light bulb on in my head for why almost every 1-2 weeks, I find an order I placed for one price NOT filled while there are lower prices in the book that I would have expected to fill instantly when the prices aligned.
 
Does anyone seen any high yield corp bond recently feel free to share please.
 
JC888 said:
Does anyone seen any high yield corp bond recently feel free to share please.
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Describe high yield. There are tons out there. Do you want investment grade, speculative?
I suggest learning to use the bond screening tools.
 
COcheesehead said:
The symbols are WDI and PAXS. CEF = closed end fund. The yield is high because they are leveraged and can be very volatile. When they are good, they are really good. When they are bad they are really bad. That is the pro and con of leverage.
WDI is the most attractive right now to me. It’s selling at a 9% discount. It pays 12.5% yield, but the fund is earning 103% of that payment and the earnings are increasing. The fund also just increased the dividend in November and has 30 cents a share in undistributed income. The sponsor has it built for a long term holding.
Bond like CEFs are risky and I devote less than 5% of my fixed income to them, though they produce 15% of my cashflow. Buyer beware on anything you don’t fully understand.
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The CEFs are interesting now, especially at a discount. If you believe as I do that we are in a declining rate environment, the CEF benefits 2 ways:

-Lower interest rates reprice the cash flow stream so the NAV rises
-Lower interest rates may lower the cost of credit increasing dividends net of expenses.

We could be entering a golden period for discounted closed end funds.
 
JC888 said:
Does anyone seen any high yield corp bond recently feel free to share please.
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in my opinion, these are best bought via a fund. You want active management and more diversification than you are likely to get with individual securities.
 
JC888 said:
I am very much in need of long duration 5 to 10 years. Most of mine are in one year to 2 years.

Thank you for the question.
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There are 319 bonds on Fidelity right now rated investment grade maturing in 5 to10 years with coupons of at least 6.5% with yields 10% to below 5%.
 
COcheesehead said:
There are 319 bonds on Fidelity right now rated investment grade maturing in 5 to10 years with coupons of at least 6.5% with yields 10% to below 5%.
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Nice! Was the rate alot better when the 10 year was almost 5% a month ago?
 
JC888 said:
Nice! Was the rate alot better when the 10 year was almost 5% a month ago?
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Absolutely. When the ten year almost hit 5%, that was the time to add duration. Bonds have given equity like returns ever since that point. Today will be a good day for anyone holding bonds. The BOOM moment is here, but anyone paying attention saw it coming for the last month or two.
 
imbatman said:
Just learned something new today WRT Fidelity online bond purchases. New in the last few weeks, I have seen orders get cancelled a few minutes after placing them, even if day orders placed in the morning. Today I had 2 orders (muni bonds) do that, so placed them again only to have them cancelled again. Mind you, they already passed the system parameter screen and were not worlds away from the ask price ($99.20 for $99.90 and $108.0 for $109.0).

So I called the Fixed Income line and they explained that their bond market doesn't work like stock trades and that the bond desk is actively reviewing online orders and calling other dealers trying to find matches. So if the bond desk sees a bid from me that they don't think they can work on (even though it passed the system price limits), they will manually cancel my order to remove it from their queue.

I find this pretty incredible on the volume Fidelity must be working, and frankly, not helpful for me either because now I have no idea what they feel is an "acceptable" bid price. Should I continuously place $0.10 increment bids until they stop cancelling them? Seems unproductive for both of us. I gave this feedback to the agent, and he said really we should not be bidding like stocks and should just take offered amounts or not.

Anyone ever heard this BS before or am I just out of touch?
Click to expand...

I am a novice but this does not surprise me. 108 bid on a109 ask seems rather large. I always look at the recent trades and I bid between the last trade and current ask. The spreads can be really tight.
 
imbatman said:
Just learned something new today WRT Fidelity online bond purchases. New in the last few weeks, I have seen orders get cancelled a few minutes after placing them, even if day orders placed in the morning. Today I had 2 orders (muni bonds) do that, so placed them again only to have them cancelled again. Mind you, they already passed the system parameter screen and were not worlds away from the ask price ($99.20 for $99.90 and $108.0 for $109.0).

So I called the Fixed Income line and they explained that their bond market doesn't work like stock trades and that the bond desk is actively reviewing online orders and calling other dealers trying to find matches. So if the bond desk sees a bid from me that they don't think they can work on (even though it passed the system price limits), they will manually cancel my order to remove it from their queue.

I find this pretty incredible on the volume Fidelity must be working, and frankly, not helpful for me either because now I have no idea what they feel is an "acceptable" bid price. Should I continuously place $0.10 increment bids until they stop cancelling them? Seems unproductive for both of us. I gave this feedback to the agent, and he said really we should not be bidding like stocks and should just take offered amounts or not.

Anyone ever heard this BS before or am I just out of touch?
Click to expand...

This happens when the bond really isn't in inventory but the system has displayed it to you and allowed you to place the order. It's a bug. I've encountered it many times over the years. The bond may even continue to be displayed for days and the same will happen.

Incrementing the bids won't matter. You could even place the order for the ask and the same will happen.

The agent is an idiot, and that's why he's an agent. I've had the front line folks tell me other things that were simply wrong - basic things. If we really shouldn't be bidding like stocks, then Fidelity would not have provided the capability. Further, if that were the case, why would bids lower than the ask get filled by the dealers on the other side?

As far as them actively doing anything, that is also nonsense. It's a trading platform. You are on the platform, dealers are on the platform. The system does the matching, not a human. You pointed out the obvious fact of the situation - it could not be all manually done. Complete nonsense. You place a bid, shortly after you see the bid next to the best ask. The dealer also sees it. The dealer can accept your bid if he likes. You place your buy at the ask, the system immediately/automatically matches and it's filled. Again, the agent is lost.
 
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Montecfo said:
The CEFs are interesting now, especially at a discount. If you believe as I do that we are in a declining rate environment, the CEF benefits 2 ways:

-Lower interest rates reprice the cash flow stream so the NAV rises
-Lower interest rates may lower the cost of credit increasing dividends net of expenses.

We could be entering a golden period for discounted closed end funds.
Click to expand...

Is right now, especially after today's rally still a great entry point for leveraged CEF or many signs or pointing it for a pull back?
 
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