How sell Agency bonds with Request a Bid?

[UpQuark]

I've been buying agency bonds and happy when they get called, but CHATGPT thinks I should sell some without waiting for the first call dates to use to build a ladder that I do want to build (though I'd be fine with waiting until first-call-date tho I guess ChatGPT is correct in saying that is a risk).

When I click 'Sell' on Fidelity it tells me the bond isn't trading and do I want to Request a Bid. Has anyone done that, am I supposed to provide a desired one or just wait and see how much someone bids. Any idea how to decide whether the bid is good enough or not?

 

[COcheesehead]

If there are no bids, you have to request a bid. Fidelity will usually get 8-10 bids and present you with the highest bid in about 90 minutes. You can then accept or pass on the bid.
Expect to pay a spread, but you’ll also be paid any accrued interest.

 

[ERhoosier]

"CHATGPT thinks I should"...
That's your main issue.
Seriously- I have a number of long duration Agency bonds for their nice yields (for IG+ quality) and always hold them anticipating they get called. For a 'ladder' you might just consider the call date as your approximate 'maturity'. Over recent years only 1 has not been called (its coupon rate is still competitive), and some have happily not been called until after their dates (more months of those higher yields). In my experience trading margins on Agencies are generally so unfavorable I try NOT to sell 'em unless I absolutely have to.

 

[COcheesehead]

Yes, agency bonds won’t provide much capital gain opportunity because of their short call windows. You should consider it a success when just getting paid the interest.