Bond Quote

Bond Quote: Definition and How to Read It

A bond quote shows the current market price and key details of a bond. Quotes let investors compare bonds, assess value, and decide whether to buy, hold, or sell.

Key points

• Quotes are usually expressed as a percentage of the bond’s face (par) value.
• Par is commonly $1,000 (sometimes $100). A quote of 98 equals 98% of par = $980; 102 equals 102% of par = $1,020.
• Quotes may also be shown as yields, spreads, or dollar prices depending on the market and bond type.

How a Bond Quote Works

Bond prices change in response to interest rates, credit ratings, and market conditions. The quoted percentage converts directly to a dollar price by multiplying the percent (as a decimal) by the bond’s par value. For example:
* Quote = 101.25 → Price = 1.0125 × $1,000 = $1,012.50.
If a market lists prices per $100 of par, multiply that quote by 10 to get the per-$1,000 price.

How to Read a Bond Quote (Example)

Example quote: VZ40 – 101.25 – 3.892% – 06/30/28 – 5% – AA

Breakdown:
* Ticker (VZ40): Identifier for the bond.
* Price (101.25): Percent of par (101.25% of $1,000 = $1,012.50).
* Yield (3.892%): Usually yield to maturity — the annualized return if held to maturity.
* Maturity date (06/30/28): When principal is repaid.
* Coupon (5%): Annual interest rate paid on the bond’s par value.
* Credit rating (AA): Rating of issuer creditworthiness; higher ratings indicate lower default risk.

An investor buying this bond at $1,012.50 would receive the 5% coupon and an estimated yield of 3.892% if held to maturity.

Additional Quote Elements

• Bid and Ask: Bid is the highest price a buyer will pay; ask (offer) is the lowest price a seller will accept. The difference is the spread.
• CUSIP: A unique identifier used to track and trade individual bonds.
• Last trade vs. quote: Some displays show the most recent trade price, others show current bid/ask or yield.

Common Types of Bond Quotes

• Face-value (price) quotes: Shown as a percentage of $1,000 (or $100). Common for U.S. Treasuries.
• Yield quotes: Shown as the bond’s yield to maturity; common for corporate and municipal bonds.
• Spread quotes: Shown as basis points over a benchmark (e.g., +175 bps over Treasuries).
• Pure price (dollar) quotes: Quoted as a dollar amount rather than percentage; often used for securities with nonstandard par values (e.g., some mortgage-backed securities).

Electronic platforms (e.g., FINRA TRACE for corporate/municipal and EMMA for municipal bonds) provide many bond quotes, though some bonds trade over-the-counter and can be less transparent.

How Interest Rates Affect Quotes

Bond prices and market yields move inversely:
* When interest rates rise → existing bond prices typically fall (quotes decrease).
* When interest rates fall → existing bond prices typically rise (quotes increase).

Premiums and Discounts

• Premium: A bond trading above par (quote > 100). Often occurs when the coupon rate is higher than current market rates.
• Discount: A bond trading below par (quote < 100). May reflect lower coupon rates or diminished issuer credit quality.

Practical Notes

• Liquidity matters: Highly liquid bonds (e.g., Treasuries) have tight bid/ask spreads; less liquid corporate bonds can have wide spreads.
• Compare by yield or spread rather than price alone to evaluate return and relative risk.
• Use broker platforms, financial data services, or regulatory systems to obtain up-to-date quotes.

Conclusion

Understanding bond quotes — price, yield, maturity, coupon, credit rating, bid/ask, and any spreads — is essential to evaluating fixed-income investments. Reading quotes correctly enables clearer comparisons across bonds and better-informed trading or investing decisions.