Article by Nick Hunter

Convertible corporate bonds offer investors the opportunity to own a bond that is convertible into a set amount of common stock of the company.

The benefits can work for the investor and the company. For the corporation, they are hoping their bond investors convert so that they do not have to pay on the bond anymore and they gain shareholders. Investors see them as protection against interest rates rising and an opportunity to buy stock in a company that they already have a relationship with. There are also spread or arbitrage opportunities between the stock and bond price, as you will see.

Convertible bonds hold their price value better than non converting bonds, because the market has priced in that feature. Most bonds are not convertible, but the few that are can be very beneficial to own. You can pick and choose your timing and even have a target stock price that you will wait on before converting.

One risk to the company is there is a potential dilution in the stock when bonds converted. The excess shares created will normally hurt the EPS (earnings per share). Because of this, the issuing of convertible corporate bonds by a company requires shareholder voter approval before they are issued.

The mechanics and the attractiveness of converting a bond come down to a few things:

Conversion Price

Common Stock Value

Par Value

Bond Value

Parity

The conversion price is fixed for the life of the bond. This does not represent the price that you can own the stock at. It is not an “option price”. It is a price that when divided into the par value of the bond (based on how many you own), will equal your shares – also known as the conversion ratio.

An example would be:

A customer owns ABC convertible bond that is selling in the market at $ 1040 or $ 104, the common stock is selling at $ 54 and the conversion price is $ 50. The investor would like to convert, but will only do so when the stock value is trading above the bond value. “Parity” would occur when the bond and stock are equal. The first thing you must find out is the amount of shares the customer is entitled to. We get that by dividing the conversion price into the par value of the bond ($ 1000). $ 1000 divided by 50 equals 20.

The investor can convert out of the bond into 20 shares of stock – no more, no less. The stock is currently trading at $ 54. The stock value is found by multiplying 20 (shares) by $ 54 (stock value), which equals $ 1080. $ 1080 is above the bond selling price of $ 1040, so converting at this time would meet the customer’s objectives of converting only when the stock value was above bond value or “above parity”.

It’s also helpful when you own these bonds to figure out what price on the stock will the bond be at parity. Let’s look at another example.

A bond that you own is currently selling at $ 1160 or $ 116, and the conversion price on the bond is $ 50. At what price on the common stock will true parity occur? You want to convert the bond, but you only will when the stock value (based on your shares) will be equal to $ 1160. First, you must figure out the shares or conversion ratio. Par value of $ 1000 is divided by $ 50, which equals 20. Then, you divide the bond price of $ 1160 by 20. That will equal $ 58. Thus, if the stock in the company rises to $ 58, based on 20 shares – it equals $ 1160 or parity.

Convertible corporate bonds have a place in every bond investor’s portfolio. As long as the rating is investment grade, the risk is minimal, and the returns on the bond or the stock can be rewarding.

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Oct. 4 – Clients of Britain’s Coutts & Co favour gold and high-grade corporate bonds to see them through the current market volatility, says James Fleming, the firm’s head international private banking.

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Article by Bill Dufrane

Rarely will you find an investment where you gain a substantial reward without an equally substantial amount of risk. Let’s face it – the odds are stacked against you. Not only are there other huge banks and multinational corporations you have to compete against that have more capital than you will ever have, but there are millions of other investors trying to test their luck in the same market. Your choice of where to invest your money is therefore highly important. This is where corporate bonds come into play.

1. Corporate Bonds

Many times, corporations have great sales and service records but just don’t have the funds needed for a particular initiative. A corporate bond is high yield as essentially you are lending the company your money.

2. Credit Risk

Of course, you have to consider that many companies seek bonds because they are in financial trouble and need a quick cash injection to keep themselves afloat. It will be up to you to differentiate that companies are looking for a handout and that legitimately have a quality operation and simply need funds to expand and grow their business.

3. Corporate Bond Ratings

Credit risk on bonds is actually rated in an easily understandable fashion. Triple A bonds are very low risk, and similarly low yield. BB is considered junk – very risky but potentially insane payouts, all the way to D (avoid these at all costs).

4. Interest Rates

If you are going to be acquiring a bond, of the things you should look for, the interest rate is high on the priority list. Getting a bond with even a 1% better rate of interest can result in hundreds of additional dollars in your pocket each year. Since general interest rates can change, a bond purchased today offering 5% is worth less if interest rates in general rise to 8% a year later.

5. Life To Maturity

Many corporate bonds come with the option to be callable. This means that they can be redeemed prior to the date of maturity. Companies do this when interest rates fall, and they wish not to continue making high interest payments to bondholders. In essence, this is a form of corporate re-financing similar to that done by homeowners with their home equity. That callable feature represents the risk to an investor that, though initially receiving high interest payments, they may not be able to enjoy that same rate for the life of the bond. As a consequence, those bonds are often less expensive and have lower interest rates.

Article by MarketMinder Editorial Staff

Simmer Down Over Corporate Bonds

February 9, 2010

Sentiment may be shaking the corporate bond market right now, but companies’ prospects are largely robust.

http://www.marketminder.com/a/fisher-investments-simmer-down-over-corporate-bonds/f644d097-ff32-43ad-8ba6-b2d5b09f5ce9.aspx?source=home

Story Highlights:

>The corporate bond market saw a small pullback lately as spreads rose and sales declined.
>Overall, movements in the corporate bond market seem to reflect short-term jitters rather than companies’ prospects, which are proving robust.
>After such a large surge last year, it’s not surprising investors may take a breather to assess where to go from here. That doesn’t necessarily buck the upward trend.

_____________________________________________________________________

As a slew of government debt fears brew globally, many worry (needlessly, in our view) we’re at the point of boiling over. Debt woes aren’t trivial for individual nations, but even in the best of times there are always trouble spots-this cycle should be no different. But perhaps these debt jitters are why the corporate bond market saw a small pullback lately.

Corporate bond returns rebounded spectacularly last year, rising 16.3%, but returns are now slowing. Spreads (the difference between corporate bond yields versus relatively risk-free government yields) recently rose at their fastest pace in more than two months, with junk bond spreads increasing 13 basis points. And the higher borrowing costs are making companies think twice about issuing debt-bond sales fell 7% from December to January and 24% from a year earlier. Some extrapolate the rise in the yields spread to receding investor optimism in the global economic recovery, underscored by government debt problems globally and high unemployment domestically.

But before investors assign too much weight to recent corporate bond market events, it’s important to note corporate bonds’ absolute yields are still near four-year lows. Big firms can still borrow relatively cheaply. Though bond sales from India to Korea to Brazil were canceled last week, there were plenty of big offerings that were successful (and some that were oversubscribed). Further, non-bank companies are incredibly cash-rich-historically so-and are in a healthy enough position to choose to delay bond offerings to take advantage of a more profitable environment-if they so wish.

Overall, movements in the corporate bond market seem to reflect short-term jitters rather than companies’ prospects, which are proving robust. S&P 500 companies’ reported earnings thus far have greatly surpassed expectations-of the 314 companies reported, 74% beat analyst expectations and earnings are expected to increase 206% from the prior year. (You read that correctly-206%.) This year, firms can continue to look forward to business activity picking up as extremely lean inventories are replenished.

Note, the widening spreads are taking place during the same period debt fears are striking stocks. These shudders are likely more tied to sentiment than true fundamentals (remember, Greece’s GDP is just 0.6% of the global economy, and Ireland’s and Portugal’s are even smaller). After such a large corporate bond and stock surge last year, it’s not surprising investors may take a breather to assess where to go from here. As debt and other fears prove to have a lukewarm rather than melting impact on the global recovery, where to go from here could very well be upward.

*The content contained in this article represents only the opinions and viewpoints of the MarketMinder editorial staff.

Disclaimer: This article reflects personal viewpoints of the author and is not a description of advisory services by its author’s employer or performance of its clients. Such viewpoints may change at any time without notice. Nothing herein constitutes investment advice or a recommendation to buy or sell any security or that any security, portfolio, transaction or strategy is suitable for any specific person. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

Naples, FL (PRWEB) October 17, 2011

Gilman Law LLP, a prominent national securities law firm, announces the launch of a new website designed to inform the public of current securities fraud investigations. For over 30 years, Gilman Law LLP has successfully enforced the rights of investors who have been the victims of securities fraud. The firm specializes in prosecuting cases relating to securities fraud, stock manipulation and shareholder?s rights, and is nationally recognized for its securities, antitrust and consumer practices. With this new securities website, Gilman Law LLP hopes to aid victims of investment fraud with the information needed to take legal action.

Visitors can access the new site and learn more about current securities fraud investigations by going to Gilman Law LLP?s main website, http://www.gilmanlawllp.com or http://www.gilmanlawsecuritiesstocksbondsfraud.com or the main investigation page Securities Under Investigation.

CURRENT INVESTIGATIONS

Ralcorp: Ralcorp. Holdings Inc. (Ralcorp) and its Board of Directors has been named in a putative shareholder class action lawsuit in Missouri Circuit Court alleging a breach of fiduciary duty to shareholders and violations of numerous state and federal laws (courthousenews.com/2011/09/19/Ralcorp.pdf”) (Cause No. 1122-CC09665) The allegations stem from Ralcorp?s allegedly unreasonable refusal of a proposed offer to acquire the company made by ConAgra Foods, Inc., even though the generous cash offer was well above Ralcorp?s market price.

The present global economic scenario reflects a trend where the richest has it all. This has led to the proliferation of many brokers and banks, which guide you on how you can make your money work you and earn rich dividends. The free market economy promotes a “winners take it all” environment. As a result, it has become utterly crucial for all of us to invest some portion of our income in bonds and earn some more bucks. A host of financial services are also on offer by different investment gurus who help you decide the right move at the right time when investing in bonds.

A recent media report also revealed how tax-free bonds have emerged as a boon for retail investors. This has increased global cash flow as more and more people are getting initiated in the process of investing in tax-free bonds. The new policy measures have created a favorable climate for investors who are eager to save money by investing in bonds. Usually floated by big corporate houses, bonds are essentially flexible kinds of financial instrument, which can be purchased by any one provided company that they will repay the money borrowed by selling the bonds with interest on a specified date.

Unlike mutual funds or shares, bonds are usually risk-free in nature, and guarantee greater returns to the company. The regular income from bonds will make you augment your income at a much faster rate, unlike other investments. In order to raise funds at a large-scale large corporate houses use bonds as a money-augmenting tool.

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Some of the bonds, which are quite popular amongst clients, are as follows-

Municipal Bonds-Municipal bonds are generally known as ‘munis’. They signify the bonds, which have been issued by municipal corporations. Municipal bonds empower the holder to claim tax exemption.

Corporate Bonds-Corporate giants float corporate bonds. However, these bonds carry a risk factor no matter how big the corporate house is.

Government Bonds-The concerned government authority, to raise funds generally issues government bonds. They are also risk free in nature. They also provide one with tax exemptions.

Saving Bonds-The government also issues savings bonds. A major advantage of this bond is one can easily get tax exemptions by investing in these bonds. Features of mutual bonds-It is very important to understand the features of a particular bond you are investing in . Maturity period, purchase price and financial constraints also deciding factors, which must be taken into account while investing in mutual bonds.

Bonds, are undoubtedly a valuable form of investment. It is always advisable to invest in stock bonds, as they are comparatively risk-free in nature in comparison to other bonds.

Learning the ropes of investment will become all the more easier if you are ready to keep an open mind and get out of your traditional way of thinking. The current economic scenario provides all the raw materials to become richer by investing in bonds, only if you are ready to make hay while sun shines!

Martin Lukac represents RateTake Refinance Rate marketplace. RateTake matches consumers with multiple lenders offering low rates. Got too much credit debt? Get Debt Help and you’d be surprised what we can do together.

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Duluth, Georgia, USA (PRWEB) July 27, 2011

Nordson Corporation has launched the Unity? PURJet? 30 system, a precision hot melt dispensing solution for PUR adhesive that utilizes state-of-the-art jetting technology to maximize product yield, improve assembly cycle time and increase the device impact strength, through speed, accuracy and capability. PURJet is the first dispensing solution to apply jetting technology to PUR hot melt.

The Unity PURJet applicator allows for near positive displacement jetting of heated adhesives without contact. Unlike other dispensing equipment currently available, the PURJet applicator dispenses up to 125 dots per second and can create continuous lines up to 120 mm/sec. It is an easy-to-use precision dispensing solution that operates three to four times faster than any other current available solution. The accuracy and placement from the precision jetting of the PURJet unit improves product production yield when compared with solid bead and low-end dispensing machines.

When used with 3M? 2665 Plastic Bonding Adhesive, Unity PURJet 30 provides electronic manufacturers a re-workable solution for increased production yield. The same combination also produces one of the strongest bonds for higher impact resistance. Tests conducted on the PURJet applicator, using 3MPlastic Bonding Adhesive 2665, show a 40 percent stronger bond and 55 percent impact resistance improvement resulting from improved adhesive wetting.

?Combining the Nordson PURJet 30 together with 3M? Plastic Bonding Adhesive 2665 for use in electronics assembly offers new bonding solutions for applications such as keypad assembly for mobile phone devices, and lens bonding of consumer electronic devices — including Smartphones and tablets. This combination of equipment and materials allows for high strength with narrow adhesive bond lines, and provides a re-workable solution to enable high manufacturing yield,? says 3M technical manager, Dr. David Plaut. ?3M is pleased to work with Nordson to bring forth this industry-first process in order to advance manufacturing.?

The jetting technology on the PURJet applicator facilitates compact handheld product design by eliminating restrictions for nozzle access. The Unity PURJet 30 can dispense adhesive into 0.5 mm channels without being limited by the surface geometry. Since the nozzle does not contact the substrate, operators do not need to be concerned with the distance between the substrate and the adhesive nozzle. The non-contact application eliminates Z-height programming issues resulting from complex or warped parts.

?Unity PURJet 30 from Nordson has allowed us to create a better bond between a mobile keyboard and the outer shell preventing movement of the keys, as well as unnecessary wear and early failure of the device,? said Sam YH, project manager for Hi-P Technology Co. Ltd. ?Without PURJet, we would not have been able to accomplish the improved bond. There is nothing else that is currently available to allow us to put a small glue dot in an area as small as 0.5mm channels. Plus, we have the option of dispensing dots or continuous bead with the jetting technology.?

The Unity PURJet 30 is manufactured by Nordson?s Adhesive Dispensing Systems segment. Adhesive Dispensing Systems is a leader in the precision dispensing of hot melt adhesive and related materials for a wide variety of end markets including packaging, nonwovens, and general product assembly. Learn more about Nordson Adhesive Dispensing Systems online or find us on Twitter and FaceBook.

Nordson Corporation (Nasdaq: NDSN) is one of the world?s leading producers of precision dispensing equipment that applies adhesives, sealants, liquid and powder coatings and other material to a broad range of consumer and industrial products. The company also manufactures equipment used in the testing and inspection of electronic components as well as technology-based systems for UV curing and surface treatment processes. Headquartered in Westlake, Ohio, Nordson has direct operations and sales support offices in more than 30 countries. Visit Nordson corporate website, Nordson Twitter page or Nordson Facebook page.

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Question by Alex K.: Where can I find the yearly volumes of Aaa corporate bonds traded?
Is there any website where I could obtain data from 1970 on the volumes of Aaa corporate bonds traded? I also need a measure of volatility for the bond market from 1970. Was thinking of using Viks but it does not go back to 1970, any suggestions?

Thanks!!!

Best answer:

Answer by Jim Z
yahoo finance
go to investing tab
choose bonds

What do you think? Answer below!

Invest in bonds on the stock market as they are a safe investment with a steady amount of profit. This could be good advice for someone who likes to use a low risk strategy.

When you are considering entering the stock market with bonds, it is advisable to find out a bit more about them.

Here are the 4 main bond types:-

* our national government offers them
* offered by corporations
* government at a local or state level
* governments overseas

Your original investment amount is protected with these bonds, unlike normal stock market trading.

So anyone just starting out with online stock market trading will feel a lot safer. So will people who are low risk investors.

The 4 types are:-

Treasury bonds are on the market from the United States Government Treasury.
These bonds can be for a short term of three months or a long term of thirty years or any length of time in between.
Treasury Notes (T-Notes) and Treasury Bills (T-Bills) are instances of these. These are the most safe investment of the lot as they are backed by the central banks in conjunction with the U.S. Government.
The downside of them though is that the return tends to be low. Another good bit is that you only have to pay taxes on the interest portion.

Corporate Bonds are on offer from the Securities market.
They are offered basically when a corporation wants to pass on its debt.
They offer a bit better interest rate so are a medium risk investment. The risk is that the company offering them will go belly up.

State or local government bonds.
They work more or less the same as corporate bonds. Problems at state or local level are more frequent which makes them a bigger risk than national government bonds.
There is not tax whatsoever on them. That is their great plus. The interest is free of tax. Except maybe a small bit at state level. This makes these municipal bonds an attractive investment.

The rarest are overseas bonds.
The common way to have them is via a an investment in a mutual fund. These should only be considered by a person with a much higher risk strategy. The economies of foreign countries are out of our hands. We have no control over them whatsoever.

You can take out another bond when yours reaches its maturity date.

Finally to reiterate, when you want to invest in bonds, national government ones are safest and foreign government ones are the most risky.

For the latest Marc Faber, go to MarcFaberBlog.com – In the context of all the defaults by governments all over the world, the debt of Dubai is a very small problem. Anytime there is a serious problem, the central banks come in and print a bunch of money. Next 6 months to a year there won’t be any serious problems because they can print money, but eventually countries will go bust, including the United States. Initially countries will be bailed out, but throughout history we have seen huge government defaults. We had stimulus packages and quantitative easing. You don’t have to run away from US bonds today, but the upside looking ahead to the future don’t have much upside. The dollar is weak, so your bonds will pay you less and less each year. There is also a credit risk on the bonds if the United States defaults on its bonds. Government bonds will soon yield more than corporate bonds. When you look at the world, you see Western Europe, the US, and Japan. The emerging markets combined are now larger than the economy of the three biggest economies combined. Moving forward, you should have half of your portfolio in emerging markets.
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(www.abndigital.com) New corporate bond launches this year are expected to boost the primary market by around N192billion this year. The government has issued tax waivers for investors & pension fund guidelines revisions to increase the proportion of institutional investments in these corporate papers. Wole Famurewa talks to Adetola Odukoya, Vice President, Dunn Loren Merrifield about the significance of the bonds on the health of Corporate Nigeria.
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