1. How To Analyze Corporate Bonds With Bloomberg Terminals: Introduction
  2. How To Analyze Corporate Bonds With Bloomberg Terminals: Analyzing Corporate Bonds
  3. How To Analyze Corporate Bonds With Bloomberg Terminals: Valuing Corporate Bonds
  4. How To Analyze Corporate Bonds With Bloomberg Terminals: Trading Bonds On Bloomberg
  5. How To Analyze Corporate Bonds With Bloomberg Terminals: Conclusion

After you have evaluated the credit worthiness of a particular issuer, the next step is deciding upon an appropriate valuation for that bond. There are three good ways to do this. The first method is to look at where the bond has previously traded. This can be done by looking at trade history information on Bloomberg, which is collected from the TRACE reporting system. Typing <TDH> into your terminal will provide a listing of recent trade dates, times, and prices for a particular bond. Keep in mind that pricing can vary greatly from day to day and also by size of trade, so it is best to treat this historical pricing as indicative only.

SEE: An Introduction To Corporate Bond ETFs



In the bond market, most securities trade on a spread basis (spread represents the additional compensation an investor receives over U.S. Treasuries in return for accepting greater risk.) Therefore, the second method of valuing a corporate bond is to evaluate its spread. There are a variety of Bloomberg functions for this, but a good place to start is by typing <YAS> into the terminal. This screen allows you to change inputs such as the price of the bond, the yield of the bond, or the spread to Treasuries of the bond. You can manipulate these inputs until you reach a level at which you think the bond is attractive; this level can then be your target price when attempting to purchase bonds.



Note: If the bond you are interested in is callable, you can use the yield-to-call function (<YTC>) to determine whether you are comfortable holding that bond regardless of whether or not it is called.

The final method of valuing a corporate bond is to compare its pricing with that of its peers. For instance, you might want to compare a five-year Citigroup bond with five-year bonds issued by JP Morgan, Bank of America, and Wells Fargo. You can then use the tools described above to analyze the relative valuations of each of the issuers in order to determine if you're comfortable with the value you are receiving when purchasing the Citigroup bond.

SEE: Callable Bonds: Leading A Double Life

How To Analyze Corporate Bonds With Bloomberg Terminals: Trading Bonds On Bloomberg

Related Articles
  1. Investing

    Corporate Bond Basics: Learn to Invest

    Understand the basics of corporate bonds to increase your chances of positive returns.
  2. Investing

    Find The Right Bond At The Right Time

    Find out which bonds you should be investing in and when you should be buying them.
  3. Investing

    Bond Call Features: Don't Get Caught Off Guard

    Learn why early redemption occurs and how to avoid potential losses.
  4. Investing

    How To Choose The Right Bond For You

    Bond investing is a stable and low-risk way to diversify a portfolio. However, knowing which types of bonds are right for you is not always easy.
  5. Investing

    The Basics Of Bonds

    Bonds play an important part in your portfolio as you age; learning about them makes good financial sense.
  6. Investing

    Investing in Bonds: 5 Mistakes to Avoid in Today's Market

    Investors need to understand the five mistakes involving interest rate risk, credit risk, complex bonds, markups and inflation to avoid in the bond market.
  7. Investing

    The Best Bet for Retirement Income: Bonds or Bond Funds?

    Retirees seeking income from their investments typically look into bonds. Here's a look at the types of bonds, bond funds and their pros and cons.
  8. Investing

    Surprise! The Best Long-term Bond Investment May Be Savings Bonds

    A 20-year Series EE savings bond pays more interest than a 20-year Treasury bond. So are government-issued long-term bonds the best bet going?
  9. Investing

    U.S. Corporate Bonds: The Last Safe Place to Make Money

    There aren't many other sources right now for relatively safe, steady income.
  10. Retirement

    How to Pick the Right Bonds For Your IRA

    Learn about the best types of bonds to include in an IRA depending on an investor's risk tolerance. Understand the tax benefits of holding bonds in an IRA.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center