I bought a few of these in my TDAmeritrade acct. Over 5.25% from a great bank is good to me!
We are entering a "Golden Period" for fixed income investing
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I bought a few of these in my TDAmeritrade acct. Over 5.25% from a great bank is good to me!
copyright1997reloaded
Thinks s/he gets paid by the post
Finally was able to put an order in on it. Thanks to all for letting me know it was back.
How long does it take to settle my account after the Call?
TDAmeritrade has not sent me any notification of the Call - I looked up the bond by CUSIP and found it had been called. I have not received notification messages on the website either.
Freedom56
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It settles on the day stipulated in the call. You get par value plus accrued interest on that day.
Freedom56
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More on crypto banks:
"Crypto Banks Borrow Billions From Home-Loan Banks to Plug Shortfalls
Signature and Silvergate turn to government-chartered lenders after customer withdrawals surge"
"Two of the biggest banks to cryptocurrency companies are rushing to stem a flood of customer withdrawals by borrowing billions of dollars from Federal Home Loan Banks, the system originally designed to support mortgage lending in the 1930s.
Signature Bank SBNY tapped its local home-loan bank for nearly $10 billion in the fourth quarter, among the largest such borrowings by any bank since early 2020, according to securities filings. Silvergate Capital Corp., SI a competing lender that shifted its business toward crypto a decade ago, received at least $3.6 billion."
https://www.wsj.com/articles/crypto...g-shortfalls-11674263424?mod=latest_headlines
Before anyone panics, SBNY reported reported record profits for 2022. However I would stick with large money center banks who have treated crypto like "pet rocks".
"Crypto Banks Borrow Billions From Home-Loan Banks to Plug Shortfalls
Signature and Silvergate turn to government-chartered lenders after customer withdrawals surge"
"Two of the biggest banks to cryptocurrency companies are rushing to stem a flood of customer withdrawals by borrowing billions of dollars from Federal Home Loan Banks, the system originally designed to support mortgage lending in the 1930s.
Signature Bank SBNY tapped its local home-loan bank for nearly $10 billion in the fourth quarter, among the largest such borrowings by any bank since early 2020, according to securities filings. Silvergate Capital Corp., SI a competing lender that shifted its business toward crypto a decade ago, received at least $3.6 billion."
https://www.wsj.com/articles/crypto...g-shortfalls-11674263424?mod=latest_headlines
Before anyone panics, SBNY reported reported record profits for 2022. However I would stick with large money center banks who have treated crypto like "pet rocks".
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I just wonder what the collateral is for these FHLB loans to the cryptobanks... hopefully other securities so just providing liquidity as an alternative to selling the securities. I'm not nervous as long as the collateral is solid and not pet rocks.
A clarification.
The FHLB has been an important lender to local and regional banks for decades. 100% of loans are backed by “eligible collateral” which means high quality mortgages or business loans”. There are 0 (zero) loans backed by crypto collateral. The WSJ omits this important detail to deliberately create a false impression FHLB is backstopping crypto ventures when it is clearly doing no such thing. The banks in question are engaged in traditional banking ventures that include offering crypto platforms, and are regulated. They are not “crypto banks”.
Forum policy is discussions on crypto are not allowed (see here) so let’s please move on
The FHLB has been an important lender to local and regional banks for decades. 100% of loans are backed by “eligible collateral” which means high quality mortgages or business loans”. There are 0 (zero) loans backed by crypto collateral. The WSJ omits this important detail to deliberately create a false impression FHLB is backstopping crypto ventures when it is clearly doing no such thing. The banks in question are engaged in traditional banking ventures that include offering crypto platforms, and are regulated. They are not “crypto banks”.
Forum policy is discussions on crypto are not allowed (see here) so let’s please move on
tizod
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IMHO it makes a good time to get out of ALLY before the loans drag. Big boost they got...
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Not a credit that I would buy.
Baa3 is the lowest of investment grade bonds in Moody's scale, so just barely investment grade. What are the YTW of other Baa3 rated bonds maturing in Feb-Apr 2026?
ya .. i am looking for that exact reason.
COcheesehead
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I think you posted awhile back that you allocated 5% to high yield. This bond would fit that category.
As credit ratings go down default risk goes up. So consider that in your mix. I would buy smaller lots and spread the money around. One default in your 5% allocation and it would likely take away all your interest earnings from the group.
Freedom56
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I would avoid specialty finance/Business development finance companies (Bain, Ares, Prospect Capital and others) if you believe that the economy is slowing down. They loan money to small businesses and are required to back up their debt with asset coverage. However, how they value those assets is another issue. The other issues is that these companies have managed to raise a lot of low coupon debt in 2020 and 2021. I used to own Allied Capital (AFC - Ares Capital) but it had a coupon of 6.75% and was called after they refinanced with much lower coupon debt. We are entering a period of interest rates staying higher for longer so you really need to look at coupons of 5% or higher now.
Sunset
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
If you are meaning Ally stock, then maybe some loan drag will affect it. But bad loans won't affect CD's or even savings accounts, as long as you have less than the FDIC level ($250K).
How will it affect their corporate bonds?
I've been wondering the same thing. Vanguard is the same way. Almost all their new issues are from the financial sector.
Freedom56
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The financial sector normally issues more than non-financial sectors.
"Sales of notes with a three-year tenor or less have climbed more than 80% to $138.5 billion from the same period just two years ago, after yields surged in 2022. By contrast, issuance of bonds with maturities of 10 years or more has slipped."
https://www.bloomberg.com/news/arti...-surge-to-record-start-of-year-at-586-billion
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Sunset
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
As long as they don't go bankrupt, the bonds are not affected when held to maturity.
They were mostly in the 4’s due to the extended call dates.
I know bonds trading at $100k qualify for better spreads often. Is there another purchase size that is advantageous below that $100k level?
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Not that I notice regularly... Freedom may have a view on that, though it sounds like $100k is closer to his minimum.
COcheesehead
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
If you look at other bonds of similar duration and quality, you can see how the spread varies by lot size. You can also look at depth of book - if there is one - and see how the same bond varies by lot size. Fidelity has a pretty easy interface that sorts them for you so comparison is pretty straightforward.
The beauty of bonds is that so much is known at the time of purchase. Then it’s just math, unlike equities.
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Freedom56
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It depends. Sometimes $5K-$25K gets your a better price if you are on the buy side.
I'm struggling to establish the right bond laddering strategy. Would be interested in what others think. Here are a few random thoughts:
1. I have very little fixed income with maturities past two years, except for a small amount of high yield bonds. I've seen Freedom56 and others suggest not stretching out past 5 years, at least for the bulk of funds to be invested. Thoughts?
2. Just looking at a 5 year maturity, buying anything with call dates within the next 24 months doesn't seem to deliver that much of a premium as compared to short-term Treasuries. You take the risk of rising rates stranding your funds in a below market 5 year security, but only get ~0-.75% better rates for that risk for A-rated corporate and agency bonds. Doesn't seem worth it to me. Now if you drop down into the Baa and BBB, the spreads are better, but of course more risky.
3. A few weeks ago looked A LOT better. It doesn't seem worth a move into 5 year corporates right now. Thoughts?
1. I have very little fixed income with maturities past two years, except for a small amount of high yield bonds. I've seen Freedom56 and others suggest not stretching out past 5 years, at least for the bulk of funds to be invested. Thoughts?
2. Just looking at a 5 year maturity, buying anything with call dates within the next 24 months doesn't seem to deliver that much of a premium as compared to short-term Treasuries. You take the risk of rising rates stranding your funds in a below market 5 year security, but only get ~0-.75% better rates for that risk for A-rated corporate and agency bonds. Doesn't seem worth it to me. Now if you drop down into the Baa and BBB, the spreads are better, but of course more risky.
3. A few weeks ago looked A LOT better. It doesn't seem worth a move into 5 year corporates right now. Thoughts?
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