Corporate Bond Quotes

Getting you started with quotes on corporate bonds
By M. Krasniak, Freelance Writer/Editor Corporate bond quotes are in terms of prices or yields. Bond quotes assume a $100 par value bond. For example, a quote of $102.50 means that if you purchase a $100 dollar bond, you would pay $102.50. A bond's yield is the expected annual rate of return for holding the bond from the day of the quote until it matures.

For the small individual investor, understanding and using corporate bond quotes is a great way to help plan the fixed income portion of an investment portfolio and to calculate risk premiums on various other instruments that you may want to include in your portfolio. These steps will help you to get started:

1. Learn to read and understand quotes on corporate bonds.

2. Locate corporate bond quote providers.

3. Consult with a professional.

Understand corporate bond quotes

The financial press prints bond quotes for the largest bond issues every week. A guide to reading the quotes is included with this table. This is a great place to start learning about quotes on bonds. It is also important to monitor trading in corporate bonds, so you can understand how market forces affect rates on corporate bonds.
Try:  The first thing to do is understand how corporate bonds work. PIMCO has an excellent introduction. It is also important to get a sense of the broader corporate bond market. The Wall Street Journal provides a variety of rates on corporate bonds.

Find corporate bond quote providers and updates

Getting good quotes requires balancing time and money. If all you need to do is see the shape of the yield curve, this is available for free on most websites that provide financial news. On the other hand, a bond trader prefers trade-by-trade updates and this can be expensive. For the typical individual investor however, daily or weekly corporate bond quotes are adequate.
Try:  The New York Times provides daily updated data on the most active bonds in the investment grade, high-yield, and convertible categories. Yahoo provides a bond screener that allows you to input a variety of bond characteristics, and then it finds matching bonds. This tool provides the most recent quotes on corporate bonds, along with a debt rating. InvestinginBonds.com also provides an interactive data tool for corporate bond rates.

Work closely with a professional who specializes in corporate bond quotes

Since your ultimate goal is to direct an investment strategy, it is important to discuss any investment plan with a qualified professional. Working closely with them on a regular basis is a great way to keep yourself up-to-date with fluctuating corporate bond rates.
Try:  Certified Financial Planners (CFPs) are highly regarded and held to a high ethical standard. To find a CFP in your area, go to Certified Financial Planner Board of Standards Inc. and search for a practitioner by zip code. The National Association of Financial Professionals also provides a search tool. Finally, if you have a broker or banker you currently work with, they can also help develop your bond portfolio.

• For tax purposes, the IRS treats coupon payments from bonds as income rather than dividends. Also, any increase in corporate bond rates prior to sale or maturity is taxed as capital gains. Keep this in mind when planning your portfolio.