Trading bonds: Post-trade price discovery. (Part1 of 2)


welcome back everybody into the bondrenegade and uh.

this is my second video uh.

my first video i've tried to identify a problem that i've noticed inthe bond market notes really with how retail dot retail investors acostamarket and the quality of your execution or thequality of the pricing that you received in comparison to the rest of the market joy quite poor uh.

i hope that some examples likegave you were i a opening an abrupt caught your attention andhopefully made it to the second video or a metric initiation things as promised some artist up better understanding bombmarket pricing and and really cummick whipping yourself to better p uh.

involved with this particular market so without further ado uh.

let me show you at school that's been available too individual investors for a while nowum.

no nuts it's called investing in bonn dot com investing among low-income previously was website where retailerindividual investors would go to to post trade pricing so yuki press reports for securities after the fact as dealers uh.

were required to report the trade in a timely manner to m_s_ are being what happens is after traded executedwithin a certain amount of time we enter the data and other computer and thatthat is recorded and it beads to a system like sap labs here any prints thereport previously that gives you what supposed to be transparency and to help you make better purchasingdecisions but after the fact it kind of leaves you uh.

a little lost maybe you get a report on when the embargo you about thatbasically so i think it shouldn't happen lastmonth uh.

previously you come here you click onthe floor inc and get pricing for basically anne bond that you wanted with theexception of treasures and how much the bond split that's acorporate meaning or an agency you could go to the site and you can get a pressreport october first website stopped posting traded a so now they have included some links to to separate fact depending upon whatyou look up at the corporate or a governing c you've got a finroo their market data center or if themeaning of the m_s_ are b and o most of the examples but all good you'll find will be with municipalsecurities so and i do that for a reason it's becausethe spreads are larger than the commission's a larger and i think it's probably uh.

a corporate bond market a lot moreefficient band the municipal bond market is i think it's a greater help to you guysto first understand how you can uh.

tennis getting up here meany spreads and get stopping exorbitant commissions if youare if you're not going the so just confirm that for you to lookat a m a survey emma tulika bond so your broker shown your bond and uwanna check it to me so you kind of the fact that the corporate you could havebeen dropped and when we do we they've just redesignthis whole site so uh.

need for me to aka energies just going to use is fairly recent newissue uh.

this printed last month and at the university of bond it's and aloe that uh.

alabamauniversity bond and excuses is nine one four till tuesday november bravo one uh.

i spoke on the footer said um.

to couple people last month there's an advisor down alabama'stalking to and uh.

he was interested in so we looked up together loses now you might look up abundant and learnabout it so the personal statement not disclosuresarray sheer if you got couple hours you can page through this official statement uh.

often do so so my light reading just that iunderstand from the cats and that may be present in a bond uh.

but obviously up to you how deep you want to get into the bond irecommend that you do you read them before you buy them special correct meaning significantinvestment and that particular bond so here are the details board trusteesuniversity of alabama general revenue university of alabama series point wella fact of them non-empty alabama giving accused of day-to-day which is the first settlementdate maturity date final maturity in theinterest rate spree small issue twelve million six hundred forty five thousand in itsinitial offering price ninety eight five eight point four quickly coherency trade activity 'em and so here we see 'cause required this means a customer who bought thispond for that price about this moment and it tell you when and what time does not tell you from where which is interesting uh.

the peace all that price and you wanted to purchase pond at thatprice you would have to know this dealer and for many of you that just won't be anoption so let's look at what happens at thevery beginning of one of these trade squirrel whenthese first print uh.

collapsed here's our breakdown animation okay you recall the principal amount of this q setup of this bunker at issue in was twelvemillion six and forty five thousand and a three point two five percentinterest rate this pond and here the initial offering price manyexploited by four felicity first-rate if this keeps it had ever traded was cute inner dealer tray for theentire amount of the issuance so all this bond went to one dealer the deal would be the underwriter that information is available and anofficial statement olney on market place in what is a i know who it is but do you wanna knowwho it was you just look at the bank i'll look at the official statement soyou'll see a different pricing their any much better and say wait a minute the says ninety six point six oh four oh but up here that tells you the initial offeringprice of ninety x buddy for four what is the deal bill is that this inner dealer trade well the initial purchase of thesecurity into the underwriters coffers for their own their county fuel so the entire issue went to one hundredwriter at this price and they're entitled to an underwritingdiscount so that means that they had to buy the bond at a discountmega distributed through their channels and make money so you retail initial offer price oak is ninety eightfive five four okay here we see uh.

immediately that these guys have orders for these bonds well the way the bible on the new issuesa little different than you live on the secondary the new issues a process uh.

there is any a lottery type ofsystems in place in typically retail investors can get into a new issue before institution so you'll have aretail order period that maybe before the institutionalrickard so that if there's retail appetites of retailinvestors are interested in peace and i want to get involved they can simply sign up unsubscribe in the new issue do there custodian at the end of their budgetwould do it through their custodian uh.

and their broker would do it throughtheir broker dealer and i hope we get filled if you want in the issue of and if you don't thenhopefully you within subscribe we see that the price stays in thesteady at ninety x played by four and there is are not prepared ninety-six pot seven someone up the underwriter and allowed to move this price uh.

indicate discounts for certain reasons or maybe evenarbitrarily at its discretion um.

this looks like it might have beena friend and family trade and you know they're allowed to do thatthough x.

Source: Youtube

Trading bonds: Post-trade price discovery. (Part1 of 2)

In this 2 part video, I show you how to check the "prints" for prices on a municipal bond. I briefly cover the new issue order process and I show you the "behind the scenes" anatomy of bond transactions once an issue starts to trade on the secondary. Last but not least, you'll learn how to see the markups on customer buys. Knowledge is power and I hope this helps you in your endeavors!
Make sure you see both. (parts 1 and 2!)