Bond pricing became more difficult as the bonds became more complex. The estate put and ratchet bonds are just two innovations that create difficulty when you attempt to get bond price quotes.

What is fixed income pricing? It is a variety of things. Frequently the syndicate the markets a bond issue buys it at a discount and resells it at a profit. The difference is the spread. In order to sell the issue the prices for bonds must be competitive and compare to prices for other similar issues.

Keep in mind that:

1. Fixed income guidance helps structure bonds so that bond pricing is favorable.
2. Up to date data systems enable the investment banker to find appropriate bond prices that gives a comfortable profit and yet sells.
3. New communication systems allow dealers to trade directly with transparent bond prices.
   

Action Steps
The best contacts and resources to help you get it done

Find an expert to help with fixed income pricing

If you want to issue bonds and make the issue palatable to investors, but beneficial for the company, you need to find the best fixed income structuring to accomplish your mission. Experts in the field can create innovative ways to arrange your debt that helps the company's financial picture.

I recommend: Andrew Kalotay Associates, Inc. offers advisory services that include debt management for major corporations. They compare bond pricing of like corporations so you have a starting point. The company introduced the ratchet bond that eliminated the need for a costly series of callable bonds. Manufacturers and Traders Trust Company also provides assistance and advisory services for the clients they underwrite.

Use a fixed income pricing system to make recommendations

You need to see the full picture of the bond market and the underlying company before you recommend any issues. Just checking the market price for bonds doesn't tell the whole story, so the financial professional needs more information. Often computer programs directly linked to real market time do the trick.

I recommend: Thomson Reuters, known individually as sources of knowledge, now merged to give brokers and investment bankers tools to make critical decisions whether calculating bond price or analyzing a bond quote. MBRM, creators of UNIVERSAL Add-ins, a risk management and pricing program, show bond option pricing.

Use new network systems for transparency when fixed income pricing

In order to remove the confusion, new services offer transparency in their information, whether they offer trading dealer to dealer or strictly as an informational system. These give an idea of the actual price of other bonds without the spread and enable you to use the information to calculating bond price.

I recommend: FINRA offers transparent pricing for consumers and professionals alike. Bontrac, INC. has Bondtrac Professional for live updates of bond pricing that is also transparent.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  There are all degree of needs when you want information on bond pricing. Find a fixed income pricing system that fits your needs.