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I notice that the nearby trades do not have negative yields, so I don't think we can conclude that the market overall is viewing these bonds as safer than government bonds. Instead it looks to me like the negative yield is an outlier caused by apparent high volatility on this bond. This, in turn, could be the result of illiquidity or other issues related to ...


3

Your question assumes that all government bonds with a positive yield are more reliable than any company's bonds. There are some circumstances we should take into account here: The best government bonds have a negative yield already (for 10 year bonds this includes Japan, Switzerland, the Netherlands and Germany - currently even France). The bond that was ...


0

Yes these two forces are in opposition, so the magnitude of each force is what determines the overall movement. If credit spreads move more than interest rates then bond prices will fall overall. Bonds can also be more sensitive to spreads than to rates, depending on the characteristics (and riskiness) of the bond. So a move in spreads can overshadow a ...


4

A bond is like a loan. The issuer receives money up front in exchange for a fixed set of payments. Let's think about how the issuer views the situation where the rates on similar bonds fall. If prevailing rates suddenly become low, then the issuer can now take out a new "loan" with lower rates by issuing a new bond with lower coupons. So ...


1

There are some specifics that will depend on your tax jurisdiction, but here's some generalities that may help: When should I switch from stock to bonds? You should start moving towards bonds or other low-risk vehicles when you can't (or don't want to) afford the risk associated with stocks. Typically that means that you're within 5 years of needing to ...


1

If a $1 grows at an annual rate of r, the value after T years is (1+r)^T. Bond prices work in reverse: how much is a future cashflow worth today? Today's Balance * (1+r)^T = Future Balance Today's Balance = Future Balance / (1+r)^T The denominator on the right side of the second equation increases as r increases. A higher interest rate results in a lower ...


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It's called a transfer in fraud of creditors, and the bankruptcy court would claw it back. It could also be a crime.


1

The initial purchase is most commonly done by the underwriting bank(s) that set up the bond issue. The bank(s) buy the bonds directly from the issuer for a slight underwriting discount, then resell the bonds to other investors in the open market. The underwriters "price" the bond by setting the coupon in such a way to increase their odds of ...


2

The trade histories don't overlap, which makes me think that the original bond (00430HAA0) was re-issued under a new CUSIP (00430HAB8). I don't see anything in their financial reports that would explain the change in identifiers, but that bond is the only one that they list as active in their financials. In any cases, the price for 00430HAA0 is not "...


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Either the quote is wrong or you misunderstood it. Even the debt of healthy companies can be worth less than its par value if interest rates have gone up since the debt was issued, or if there is a dip in the economy that affects the company, but not necessarily severely enough to go bankrupt. So eliminating companies whose debt is less than par is perhaps ...


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All the above answers are good and correct. I would like to add that the buzzwords for this recession seem to be “forbearance” and “solvency”. https://en.m.wikipedia.org/wiki/Forbearance The Fed is pushing hard for banks to allow lots of lenient Forbearance. This may require more coordination so that the Fed & Congress work together closely to ensure ...


1

Normally, when the market is tanking, investors and traders move into bonds for safety. In early March, US and German 10 year securities hit new short term highs as the stock market drop began. When equity selling accelerated, routing stock markets, bond selling took hold as investors and traders needed to raise cash. Another factor was that large ...


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The most likely explanation is margin calls and the Fed: “The concomitant sell-off in both the risk-free asset, bunds, as well as in credit and equities can either mean that markets are pricing in unrealistic bond-supply shocks and/or, more likely, mean that markets are de-leveraging,” wrote Erjon Satko, a strategist at Bank of America Merrill Lynch. “Times ...


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