Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
@MikeM- not at all. Thanks much for all of your info. I'm familiar with the Schwab fixed income pages, but I never thought of looking for a call date of two years instead of a two-year maturity. Good thinking!
@MikeM, Thanks for sharing your research process. I agree with it. BTW, I owned DB equity until recently. Going forward, I will try to note each different thought distinctly.
"I do not currently have a single Agency bond as every one of them I bought got called." "[A]gree, agency bonds never seem to get past the first call date for me . . ."
While that has been our collective experience, there is a non-zero probability that Agencies may not be called sometime in the future. I say this because some investors outside this forum have bet $Bs against long term bonds (or they are long interest rates).
I am asking myself, "if I would be OK if the bonds I am buying never get called?"
A corollary thought is, "Am I better off with an Agency that presumably gives me only a six month call protection than a corporate bond that might give me a longer period of call protection but of lower credit quality?"
Many factors go into answering these questions and every investor's situation is different from the next one.
In the few times I looked in the past couple of years, I have not seen a new issue Agency with a year or more call date. What is your experience? May be share when you see one.
Edit: Currently, there is a new issue single "A" corporate (Prudential Financial), non-callable, 5Yr, yielding 10 bps more than Treasuries. That is a scary spread.
"I have found when reviewing the available lists on Schwab, you need to 1) look at the 'yield to worst and the 'yield to call'. Those can be different than the advertised 'yield to maturity'. 2) when reviewing Schwab's lists, the longest 'next call date' isn't always the highest yield choice shown at the top of the lists."
I have only ever bought Treasuries at Schwab and I do not tend to buy bonds there because of some frictions surrounding when they deposit funds from maturing bonds and MM sweep feature. But not every bond is available at every brokerage (participation / allocation / inventory issues) and so it is useful for me to learn about the Schwab fixed income site.
Could you please help me locate "yield to call" and "next call date" headers in the Schwab's list for new issue corporate bonds? Neither I nor the Schwab broker that tried to help me was able to locate these in the lists. (Fixed income desk does not work on the weekends.) I was able to find the yield to call and next call date for each bond by going to the detail page of each bond. But it is not very efficient to do so for every issue.
(I can presume for the most part that Yield to call is the same as Yield to Worst, which is a header in the list.)
@BaluBalu- On Friday I placed an order for the Deutsche Bank bond that @MkeM found. As of today the order is shown as open... this is the first time that I've tried to buy a corporate bond at Schwab, and I have no idea how the corporate bond order-filling process works. I don't recall any significant delay in buying either CDs or government paper, but the market procedures may be different for corporate. I'll let you know how this all works out.
Bought two new issue Agencies at Fidelity (they do not settle for a few days).
3133ERF22 - FYI, No inventory left at Fidelity (sorry I took whatever was available) but it is available in Schwab inventory; however, Shwab is charging a transaction fees because the quoted price is 100.1.
3130B3W82 - Inventory at Fidelity and not at Schwab.
Edit: Schwab does not have a separate New Issue tab for Agencies. One has to pull up the list of Agencies and look for "Recently Issued" under Description. In the Price column, if the price is $100, one knows they are potentially new issue. If the price is different from $100, then you are buying in the secondary market (even if recently issued). Schwab's price quotes for bonds includes transaction cost.
@Old_Joe, I believe we need to wait until the stated "settlement Date" listed in the description, 11/29/2024. My status for that bond is also still listed as open. As I mentioned before, I have waited a few days on other bonds like this but never had one did not go through.
I sold out of GSIHX within my IRA, and with the proceeds I bumped up NEAR, BTO, HTD and plugged the balance into SWVXX. With impending tariffs, I'm a bit unclear what the near term future holds for areas in which Rajiv Jain operates internationally.
I guess one could buy DB bond until 2PM Wednesday if DB does not close the offering sooner. DB might close the offering before fully subscribed. If your trade does not execute on Wednesday, I would presume DB cancelled the offering which is unlikely (bad PR) but DB has the right to do so. If the subscription does not meet DB's thresholds, I can see them cancelling.
The settlement on this is Friday which means I will have to sell MM by Wednesday (4PM EST) and if DB cancels the offering and I come to know only after market close on Wednesday, then I will have to remember to buy back MM on Friday. SWVXX trades on Friday but the cut off time is 1PM EST.
Let me know if they accept the order before market close (4PM) on Wednesday and I will place the order then.
P.S.: Bond market closes early (2PM EST) on Friday.
Yesterday's post -"3130B3W82 - Inventory at Fidelity and not at Schwab."
Today, I bought more of and whatever was left of this new issue. Currently, at Fidelity the highest yield of new issue Agencies maturing in 2034 is 5.5% (only one issue). If you would like a higher yield from a new issue Agency, you have to go to 2044 maturity.
I am inclined to wait until after Thanksgiving for more new issue Agency offerings.
Comments
D@Old_Joe & @rforno, Thanks.
"[A]gree, agency bonds never seem to get past the first call date for me . . ."
While that has been our collective experience, there is a non-zero probability that Agencies may not be called sometime in the future. I say this because some investors outside this forum have bet $Bs against long term bonds (or they are long interest rates).
I am asking myself, "if I would be OK if the bonds I am buying never get called?"
A corollary thought is, "Am I better off with an Agency that presumably gives me only a six month call protection than a corporate bond that might give me a longer period of call protection but of lower credit quality?"
Many factors go into answering these questions and every investor's situation is different from the next one.
In the few times I looked in the past couple of years, I have not seen a new issue Agency with a year or more call date. What is your experience? May be share when you see one.
Edit: Currently, there is a new issue single "A" corporate (Prudential Financial), non-callable, 5Yr, yielding 10 bps more than Treasuries. That is a scary spread.
Hi @MikeM,
I have only ever bought Treasuries at Schwab and I do not tend to buy bonds there because of some frictions surrounding when they deposit funds from maturing bonds and MM sweep feature. But not every bond is available at every brokerage (participation / allocation / inventory issues) and so it is useful for me to learn about the Schwab fixed income site.
Could you please help me locate "yield to call" and "next call date" headers in the Schwab's list for new issue corporate bonds? Neither I nor the Schwab broker that tried to help me was able to locate these in the lists. (Fixed income desk does not work on the weekends.) I was able to find the yield to call and next call date for each bond by going to the detail page of each bond. But it is not very efficient to do so for every issue.
(I can presume for the most part that Yield to call is the same as Yield to Worst, which is a header in the list.)
Thanks for your help.
3133ERF22 - FYI, No inventory left at Fidelity (sorry I took whatever was available) but it is available in Schwab inventory; however, Shwab is charging a transaction fees because the quoted price is 100.1.
3130B3W82 - Inventory at Fidelity and not at Schwab.
Edit: Schwab does not have a separate New Issue tab for Agencies. One has to pull up the list of Agencies and look for "Recently Issued" under Description. In the Price column, if the price is $100, one knows they are potentially new issue. If the price is different from $100, then you are buying in the secondary market (even if recently issued). Schwab's price quotes for bonds includes transaction cost.
I guess one could buy DB bond until 2PM Wednesday if DB does not close the offering sooner.
DB might close the offering before fully subscribed. If your trade does not execute on Wednesday, I would presume DB cancelled the offering which is unlikely (bad PR) but DB has the right to do so. If the subscription does not meet DB's thresholds, I can see them cancelling.
The settlement on this is Friday which means I will have to sell MM by Wednesday (4PM EST) and if DB cancels the offering and I come to know only after market close on Wednesday, then I will have to remember to buy back MM on Friday. SWVXX trades on Friday but the cut off time is 1PM EST.
Let me know if they accept the order before market close (4PM) on Wednesday and I will place the order then.
P.S.: Bond market closes early (2PM EST) on Friday.
Today, I bought more of and whatever was left of this new issue. Currently, at Fidelity the highest yield of new issue Agencies maturing in 2034 is 5.5% (only one issue). If you would like a higher yield from a new issue Agency, you have to go to 2044 maturity.
I am inclined to wait until after Thanksgiving for more new issue Agency offerings.