Hi all,
We are still trying to research more about bonds. (The Mark Glowrey book "Sterling Bonds And Fixed Income handbook" has arrived, the first 100 or so pages read, and we are now getting more au fait, with the various yield/price/duration etc. type calculations).
I decided to now take a walk through GoSeigen's earlier stream of consciousness, and try to make a further study of the AnglianWtr 2023 (XS0089553282) bond.
GoSeigen wrote:I'm going to walk you through what I am thinking and doing to research this bond and answer some of the questions you might have.
Here goes, my stream of consciousness! Maybe follow though the steps yourself...
Whilst we were pleased to see that our attempt to calculate the current "running yield" was a match to that listed to the HL site today, i.e. we used:
100 / 126.08 * 6.875 = 5.453
(where 126.08 is the price at yesterday's close)
We are still struggling to with one or two terms and making sense of the prospectus.
Firstly why is the "issue price" on the HL site 98.83? Does this also mean the price at redemption is 98.83? After rubbing my head, I then note the prospectus states
"Issue price: 98.825
per cent"
So is the usage of the term per cent a cryptic (to the naive) way, of stating the redemption value is actually 100.00?
I guess what we saying is that a clarification of the terms "issue price", "redemption price" and "par" would be grand at this stage - not seen it in Mark's book yet - but will keep at it.
Secondly, I notice a discrepancy in the quoted value of the coupon. All the public listings of trades of this instrument (e.g. HLs and IIs broker sites) state a figure of
6.875%, however the prospectus quite clearly states
6.625%. What's going on? At what point did the investment become slightly more lucrative, and presumably the change has never formally documented...?
Well sorry about all the questions
but we are eager to get our facts straight (and don't repeat another "Castle Trust" mishap), and for now we are going to continue reading through the data and analysing this particular bond as instruction.
Matt and Mel