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

[MercyMe]

Northern States Power Senior Secured 6.5% coupon due 3-1-28 offered at 4.94%
non-callable

Northern Sts Pwr Co Minn
Price
107.057 Qty Available
100 YTM
4.94 YTW
4.94
CUSIP 665772BQ1 Coupon 6.5
Type Corporates First Coupon 9/1/1998
Sector Utilities Next Coupon 3/1/2023
Moody/S&P Aa3 / A  Dated

Nice find. Too bad Fidelity doesn't offer it (not surprisingly).

 

[Montecfo]

Nice find. Too bad Fidelity doesn't offer it (not surprisingly).

May see some slightly better rates today after Bank Of Japan moved to raise the rate cap on its 10 year bonds by 25 basis points. Sovereign rates all higher this am.

 

[COcheesehead]

Nice find. Too bad Fidelity doesn't offer it (not surprisingly).

Its not a new issue. It’s on the secondary market and there is no ask. So you could buy it at Fidelity if some were available. You can try entering a limit order bid.

 

[Montecfo]

at E*Trade it appears to be gone.

 

[Freedom56]

Thanks. What do you consider the most reliable source for determining whether a company generates free cash flow and profits? Are there particular sectors that have more of these types of companies?

SEC 10Q filings or the PowerPoint presentations form the companies when they report their quarterly results. The always include cash flow and debt information. Telecoms, internet providers, utilities normally have good cash flow. During a recession, the last thing to go is mobile phone, internet, and cable TV, electricity and water. They in general are pretty terrible stock investments but okay for bond investors.

 

[MercyMe]

Its not a new issue. It’s on the secondary market and there is no ask. So you could buy it at Fidelity if some were available. You can try entering a limit order bid.

Thanks. I was not looking at it as a new issue. I just typed the CUSIP into the search box and it says Fidelity is not offering it. There is no bid or ask listed so it doesn't let you proceed to attempt an order.

 

[Montecfo]

Deutsche Bk Ag N Y non-callable 4.843 due 9-9-27
Price
102.195 Qty Available
150 YTM
4.843 YTW
4.843
CUSIP 25160PAM9 Coupon 5.371
Type Corporates First Coupon 3/9/2023
Sector Financials Next Coupon 3/9/2023
Moody/S&P A1 / A- Dated 9/9/2022

would prefer a US Bank but it is an A1 credit.

 

[MercyMe]

Deutsche Bk Ag N Y non-callable 4.843 due 9-9-27
Price
102.195 Qty Available
150 YTM
4.843 YTW
4.843
CUSIP 25160PAM9 Coupon 5.371
Type Corporates First Coupon 3/9/2023
Sector Financials Next Coupon 3/9/2023
Moody/S&P A1 / A-  Dated 9/9/2022

would prefer a US Bank but it is an A1 credit.

Wasn't there some concern somewhere in this thread about Deutsche Bank? Pretty sure there was.

 

[Freedom56]

Long rates are going to move up. As the CEO of JP Morgan stated, the 10 year bond has been kept artificially low since 2009. As he also stated, in a 2-2.5% inflation environment, the 10 year treasury normally yields 4-4.5%. Needless to say, we are not in a 2-2.5% inflation environment. Bond traders are artificially hold rates down to slow the hemorrhaging from medium to long term bond funds that are bloated with low coupon debt. It just won't work. With money market funds yielding 4% now, who is going to buy these garbage bond funds that pay a fraction in income and offer no capital protection. As long as the Fed continues to raise rates, bond funds are going to suffer. As long as meme stocks and crypto continue to trade at ridiculous valuations that have no basis in reality, the Fed will continue to raise rates. You can't have the financial markets create artificial wealth out of think air and not expect inflationary pressure. Play the short end of the curve, don't go beyond 5 years duration. better yields will come for 7, 10, 15 year durations.

 

[COcheesehead]

Thanks. I was not looking at it as a new issue. I just typed the CUSIP into the search box and it says Fidelity is not offering it. There is no bid or ask listed so it doesn't let you proceed to attempt an order.

You can tell right away because the third party price is 107. A new issue would be 100.

 

[MercyMe]

You can tell right away because the third party price is 107. A new issue would be 100.

Right, I understand. I guess my point was really just that it was not available at Fido.

 

[COcheesehead]

Thanks. I was not looking at it as a new issue. I just typed the CUSIP into the search box and it says Fidelity is not offering it. There is no bid or ask listed so it doesn't let you proceed to attempt an order.

You can attempt a bid. Once you search the CUSIP, click on the title link and an order page will pop up. You can then enter a limit order.

 

[COcheesehead]

Right, I understand. I guess my point was really just that it was not available at Fido.

It’s a secondary market bond. It’s available to bid on anywhere. No one is offering it with an ask.

 

[Montecfo]

Wasn't there some concern somewhere in this thread about Deutsche Bank? Pretty sure there was.

Has experienced successive positive upgrades.

"The rating agency Moody’s today announced that it has upgraded all of Deutsche Bank’s long-term ratings by one notch. Our long-term deposit ratings and senior unsecured debt ratings have both been upgraded from A2 to A1 with a stable outlook, their highest level since 2012, while our Baseline Credit Assessment (BCA) is now at its highest since 2014.

This represents the fourth successive upgrade of Deutsche Bank by leading rating agencies, and the second upgrade by Moody’s, in the past fourteen months. The agency sees Deutsche Bank as well placed to face the headwinds in the current environment."

https://www.db.com/news/detail/2022...pgrades-deutsche-bank-s-ratings?language_id=1

 

[Montecfo]

^^^ noticing now minimum 150, a bit on the high side.

 

[Montecfo]

Long rates are going to move up. As the CEO of JP Morgan stated, the 10 year bond has been kept artificially low since 2009. As he also stated, in a 2-2.5% inflation environment, the 10 year treasury normally yields 4-4.5%. Needless to say, we are not in a 2-2.5% inflation environment. Bond traders are artificially hold rates down to slow the hemorrhaging from medium to long term bond funds that are bloated with low coupon debt. It just won't work. With money market funds yielding 4% now, who is going to buy these garbage bond funds that pay a fraction in income and offer no capital protection. As long as the Fed continues to raise rates, bond funds are going to suffer. As long as meme stocks and crypto continue to trade at ridiculous valuations that have no basis in reality, the Fed will continue to raise rates. You can't have the financial markets create artificial wealth out of think air and not expect inflationary pressure. Play the short end of the curve, don't go beyond 5 years duration. better yields will come for 7, 10, 15 year durations.

Well it could happen, but I am dubious. The 10 year is no longer being kept "artificially low". Fed is selling securities.

Bond traders "artificially holding rates down" requires buyers to also play along. I do not see a reason for bond buyers to accept lower rates just to help out sellers.

Inverted yield curves usually unwind with lower short-term rates, not higher long-term rates.

I agree there will be more rate hikes, but the inflation future now appears to be coming into focus, and it IS in fact around 2% since June.

But maybe this time will be different.

I am definitely seeking longer term, non-callable credits but not beyond 5-6 years.

 

[MercyMe]

^^^ noticing now minimum 150, a bit on the high side.

Yeah... this also turning into too much work. I may duck out of all this and start digging further into Bulletshares.

 

[Freedom56]

For those looking for diversification from banks, here are some new issue non-callable bonds to buy on the secondary market when they drop below par from eBay. This is a solid fee based e-commerce company that has been around for over 20 years. I use to own the 6% exchange traded notes that I bought well below par after they were issued around 2016. However those were called. They recently issued new 3,5 and 10 year notes to institutional investors and these are trading on the secondary market. Eventually as rates rise they will be pulled back to or below par.

https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C1059424&symbol=EBAY5500359

https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C1059426&symbol=EBAY5500360

https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C1059428&symbol=EBAY5500361

 

[beachfire]

For those looking for diversification from banks, here are some new issue non-callable bonds to buy on the secondary market when they drop below par from eBay. This is a solid fee based e-commerce company that has been around for over 20 years. I use to own the 6% exchange traded notes that I bought well below par after they were issued around 2016. However those were called. They recently issued new 3,5 and 10 year notes to institutional investors and these are trading on the secondary market. Eventually as rates rise they will be pulled back to or below par.



https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C1059424&symbol=EBAY5500359



https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C1059426&symbol=EBAY5500360



https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C1059428&symbol=EBAY5500361

These seem to have make whole call provisions. Is that right? Do you view that similar to non callable? Thanks for all the info you have shared on this thread.

 

[gayl]

I just went 16% fixed income, 85% SCHB, only 1% individual stocks. I cannot believe I'm this conservative. Plus all future deposits will be into CDs. So I'll bec20% fixed soon. Is that a good allocation for someone retired 6+ years? Guess the market is ready to rebound

 

[jazz4cash]

Call me inpatient. I just bought a 6 yr MYGA at 5.45% to fund my essential shortfall in 2028. Call protection is becoming more important to me. Now I can keep waiting and watching for Golden Period opportunities.

 

[Freedom56]

These seem to have make whole call provisions. Is that right? Do you view that similar to non callable? Thanks for all the info you have shared on this thread.

A make whole call bond in a case like eBay is just as good a non-callable bond except it would be unwise to buy these bonds above par. Most of the new issues these days are either make whole call or callable. With the benchmark treasury rates where they are, there wouldn't be much premium if they were called. It's unlikely that they would call these given the coupons relative to treasuries. I have had two make whole call bonds called this year and in both cases I was able to find something else to replace the bonds called taking into consideration the call premium I received. But by no means do the call premiums make you 100% whole.

 

[NomDeER]

For those looking for diversification from banks, here are some new issue non-callable bonds to buy on the secondary market when they drop below par from eBay. This is a solid fee based e-commerce company that has been around for over 20 years. I use to own the 6% exchange traded notes that I bought well below par after they were issued around 2016. However those were called. They recently issued new 3,5 and 10 year notes to institutional investors and these are trading on the secondary market. Eventually as rates rise they will be pulled back to or below par.

https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C1059424&symbol=EBAY5500359

https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C1059426&symbol=EBAY5500360

https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C1059428&symbol=EBAY5500361

A make whole call bond in a case like eBay is just as good a non-callable bond except it would be unwise to buy these bonds above par.

Thanks. Trying to educate myself. What is the reason that it would be unwise to buy above par even if you are okay with the YTW?

Couple of thoughts. My observation has been that bonds showing a call date close to the maturity date have turned out to be Make Whole Call bonds. I have found going into the finra site and researching bond details revealed better info on a bonds call feature than is sometimes available on brokerage site.

But why is it that they are callable shortly before the maturity date?

 

[NomDeER]

For those who are happy with callable corporate bonds, Vanguard has a new issue 5-year bond for Canadian Imperial Bank at 5.25%. They are callable in 2 years. The CUSIP is 13607XEB9.

 

[beachfire]

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

Thanks. Trying to educate myself. What is the reason that it would be unwise to buy above par even if you are okay with the YTW?







But why is it that they are callable shortly before the maturity date?

Make Whole Calls can be called at any time. On the finra site they use the term “continuously” to describe the call period. I don’t think the date you are seeing means anything when it is a make whole call bond.