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Corporate bond prices and yields

Despite the vast size of the bond market, there are only a few user-friendly information sources about corporate bonds online, especially compared to all the noise about equities.

There are some good reasons for this:

  • Private investors who want exposure to corporate bonds are usually best investing via funds or ETFs, not individual bonds.
  • Some corporate bonds have big minimum dealing sizes well into five figures, so they’re beyond most people’s scope.
  • Corporate bond research is more difficult than equity research — with bonds you ideally need to understand the company’s business AND where your bond ranks in the capital structure should it go bankrupt AND the chances of getting your money back.
  • There’s not much demand from us, the unwashed public.

I’ll explain why you should probably use bond funds for any money you’re investing into corporate bonds another day.

(Quick version: You may need hundreds of thousands of pounds to create a diversified bond portfolio yourself. On the other hand, bond fund management charges are quite high, and there is scant choice of UK corporate bond ETFs).

Still want to know where to find corporate bond data?

Perhaps like me you’re curious to learn more about individual corporate bonds, without actually investing in them directly?

Or else maybe you’re like, well, you, and you want to take a punt on a few bonds, against all sober advice?

Either way, in this post I’ve rounded up a few places to find UK corporate bond prices and yields.

You’ll get some analysis from most of these sites, too.

Remember that if you do buy individual bonds, then at the least you’ll want to dig into the details of each bond to see how it ranks in order of the company’s debt, whether it’s callable, and so on.

Also watch out for steep spreads when you deal. Short-term trading in corporate bonds can be expensive unless you’re moving millions!

Fixed Income Investor

http://www.fixedincomeinvestor.co.uk

This is the daddy of UK bond data sites. It may be the only place you’ll need.

This site, which also provides data for many others, offers:

  • Bond of the week — A rather charmingly written weekly focus on a bond (sometimes government, other times corporate).
  • Model Portfolio — A corporate bond portfolio run by the site’s writers. (Check out its rebound since March.)

As I say, it also supplies its corporate bond price list to online brokers like SelfTrade and Barclays, as well as to media sites like the Investor’s Chronicle.

Bondscape

http://www.bondscape.net

This gives you information about UK government bonds (Gilts) as well as sterling denominated corporate bonds prices and yields.

Here’s a shortcut to the list of corporate bonds; you can also get it by going to the home page and clicking ‘Closing Prices’ in the top right.

You can also download the EPIC codes that you will need to trade in bonds as a PDF (for bedtime reading perhaps?)

You’ll see a ‘Research’ link up in the top right as well. This is just links to Fixed Income Investor.

Finally, Bondscape offers a bond trading platform that I’ve not used.

Financial Times Corporate Bond Data

http://markets.ft.com/markets/bonds.asp

The FT’s research data archives are exhaustive, and the tools to interact with the numbers are excellent. But the bond pages seem more geared to government than corporate bonds.

Bond Vigilantes

http://www.bondvigilantes.co.uk

Much more spunky than you might expect a blog about bonds to be, although clearly no Perez Hilton. (I write a blog about investing with a picture of an old armchair in the corner, so I’m really not one to talk).

I think it’s got some interesting bond commentary if you’re a wannabe finance fanboy like me. Your mileage may vary.

For some reason though the site’s font size is very tiny. Perhaps bond investors all have AAA-rated eyesight? (Little bond joke there).

Don’t try this at home

Let me stress again that investing in corporate bonds is not simply a matter of looking for a bond with a stonking high yield and then down the sofa for some spare change.

Corporate bonds are risky investments, and you can lose all the money you put into them. Bonds can and do default, and there’s none of the unlimited upside you get with equities to make up for such blow-ups with bonds, even if the chances of it happening are much slimmer.

Also, rating downgrades can reduce the market value of your bond, leaving you with little choice but to aim to hold it to maturity (and cross your fingers) and hope to get your money back.

As I write in October 2009, the big opportunity in corporate bonds I highlighted back at the start of the year has probably passed; corporate bonds have indeed rallied all year. They’re not an asset class I’m much interested in now.

US and UK government bonds I would put my money in – but not at these prices. They’re a far, far safer investment, and you needn’t worry about diversification, since gilts are effectively risk-free.

Know of any other must-read data sources for UK corporate bond prices and yields or commentary? Please do tell us in the comments below.

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{ 7 comments… add one }
  • 1 Lemondy October 8, 2009, 10:55 am

    Thanks for the article! The M&G blog is a very good read, I wish more fund managers gave that kind of insight into their investing strategy.

  • 2 pkora October 8, 2009, 12:00 pm

    “They’re not an asset class I’m much interested in now.”
    In regards to this statement, i do not think there is any asset class that is worth investing in at the moment in valuation terms. However, if you are a momentum investor, have fun because everything is going up in price with zero percent interest rates but then run like mad with your profits when you get a whiff that this bubble creating poilcy is about to end!!!

  • 3 The Investor October 8, 2009, 12:49 pm

    @pkora — I think there’s a good case for UK equities (and am very long accordingly) but I can see why others feel different. Perhaps I’ll do an article on this soon.

    @Lemondy — Glad it’s useful. Yes, the Bond Vigilantes blog is a little bit like peeking behind the curtain. If you’re interested in this sort of insight for equities too, you might want to Google Lindsell Train and look at fund manager Nick Train’s monthly reports. Good reading.

  • 4 Lee October 8, 2009, 3:03 pm

    A very very useful article, thanks for that. Non-Bank bonds have always been a bit of a mystery until today.

  • 5 Lemondy October 8, 2009, 5:21 pm

    Also stop knocking gilts! Buying gilts it the only way to be a contrarian investor at the moment – every commentator in the world is bearish on gilts.

  • 6 The Investor October 8, 2009, 9:51 pm

    But everyone keeps buying them Lemondy, hence the sky high prices! 😉 I’m 90% convinced Government debt is a bubble caused by artificial factors (QE, bank hoarding and risk aversion). If I had some from a couple of years ago at 5% I’d probably apathetically hold just in case we have a Japanese-style lost decade (v unlikely in my view), but I can’t bring myself to buy at this price. In fact, I’m tempted to do hedge buying short and shorting the longs, but there’s more than enough ways to risk losing money around at the moment.

    Time will tell who is right, eh? 🙂

  • 7 Lemondy October 9, 2009, 4:58 pm

    I know, I mostly agree with you, but, I can’t bring myself to buy the ftse at this price 😉

    I’m keeping my gilts (10% of portfolio) as a hedge against the “lost decade” risk, and in the vague hope that gilt prices will hold up/rise if this equities rally falls over on its face, at which point I’ll cash in my gilts and go buy more ftse.

    Also the cash I put in the M&G linkers fund has made over 3% in a little under a month. Nice.

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