October 12, 2010

BondDesk Report Gives Advisors an Insider’s View of Corporate Bonds

Newly launched Market Transparency Report describes trends in odd-lot transactions

A BondDesk trader reviewing bond market data. A BondDesk trader reviewing bond market data.

A free monthly report just launched by leading fixed-income technology firm Bond Desk now offers a wealth of information about the corporate bond market to retail investors and their financial advisors.

The newly launched BondDesk Market Transparency Report, which gets posted as a PDF on the BondDesk website’s homepage, focuses exclusively on corporate bond trading activity among retail investors. The report is designed to help them and their advisors gain a better understanding of this massive and complicated area of the fixed-income market.

A unique aspect of this report is that it is directed at retailers, meaning folks who take relatively small positions in bonds. That’s really what distinguishes this report from lots of other fixed-income reports that are focused on the wholesale market,” said Yuval Bar-Or, author of the book, "Play to Prosper: The Small Investor’s Survival Guide," and an adjunct professor of finance at Johns Hopkins University's Carey Business School in Baltimore, in a phone interview.

“Big institutions typically buy bonds in the area of $100 million. Here, we’re looking at small purchases of maybe five or seven or 11 bonds, up to 100, which would be initiated by the average person on the street either directly or as recommended by a financial advisor,” Bar-Or added.

Regulators define retail trades as “odd?lot transactions” under 100 bonds, which are equal to less than $100,000 par value. But while the retail market is much smaller than the institutional market on a par value basis, it accounts for roughly 75% of the trades that occur in the marketplace. The Market Transparency Report intends, as the title suggests, to provide transparency into the dynamics of the corporate bond market for retail investors. It describes trends in the market, including trading volumes, most active issuers, yield and spread movements, and significant credit downgrades and upgrades.

Based in Mill Valley, Calif., BondDesk provides enterprise-wide fixed income solutions to many top broker-dealers in North America. The BondDesk Alternative Trading System (ATS) connects broker-dealers through a centralized marketplace by offering a diverse pool of liquidity for odd-lot fixed income securities in multiple asset classes. The ATS executes over 20,000 transactions per day by providing 2,000 broker-dealers access to 35,000 live and executable offerings from over 100 fixed-income dealers.

“Transparency is important in any financial market, but it’s especially so for bonds,” said BondDesk CEO Peter Crosbie in a statement. “Our monthly report represents BondDesk’s latest effort to increase market transparency and improve the overall efficiency of the retail fixed income markets. We are committed to the long-term health of the credit markets, and we feel this report is an important contribution toward that goal.”

The monthly report, available at www.bonddeskgroup.com, provides exclusive analysis and data on a variety of key market trends. Highlights include:

  • Market Recap. A summary of the previous month’s trading activity in the retail bond market as well as the economic events that impacted demand.
  • Yield/Spread History. A running history of median yields and spreads dating back to 2006, providing a historical context for the current rate environment.
  • Yield Matrix. A table containing median yields for each credit rating and maturity, broken out by financials, industrials and utilities.
  • Volume Trends. Tables listing the most actively traded corporate issuers, as well as the highest and lowest buy/sell ratios (indicating market momentum).

“I’m not aware of any other entity that produces anything like this,” Prof. Bar-Or said. The focus of my financial literacy activities is as a consumer advocate, and as a person who speaks out on behalf of small investors, I know that in the debt space, there is a scarcity of information for retail investors. That is the niche that this report fills.”

Read about BondDesk’s recent hire of a Charles Schwab fixed-income exec at AdvisorOne.com.

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