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Author: dan2 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35345  
Subject: Re: Should One Be In Bonds Now? Date: 6/22/2002 7:30 PM
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Paul wrote:
If anyone knows a broker who will trade listed bonds at the listed price, please post it. (My experience is--as with any thinly traded stock, your order always moves the market price against you.)

Hi Paul,

Most of my bond trades have been done in issues that are not traded on the NYSE. However, in early November, 2001 I became interested in the Crown Cork & Seal 7 1/8 of 02 which do trade on the NYSE.

It is possible to buy these bonds on line through Schwab. The problem that I had, was accumulating the amount I wanted. When I first got my online quote by entering the ticker symbol CCK02, the quote was given as a certain number bid and 5 offered at the ask price. I bought the 5 and the asking price jumped about 5%, while the bid remained the same. I then entered a bid above the lowest bid shown. Shortly thereafter, someone raised their bid above mine, but the asking price remained the same. I then cancelled my bid and within a few days the price reverted back to where it was, but with only 3 bonds offered. I bought those and the ask price jumped again. I then went to the bond desks at Schwab, Merrill Lynch, and Brown for quotes on the quantities I wanted. I purchased these bonds at slightly more than the asking price on line.

My experience is limited, but I believe for small quantities of bonds listed and trading on the NYSE , there should be no problem in buying at the asking price as long as you order less than the quantity being offered.

The prices can be seen in the quote windows of both Schwab and Merrill Lynch. Often, the bond ticker symbol is the same as the stock with the year of maturity added. For example, the Lucent 06 bonds can be found by entering LU06. Using the Merrill Lynch site, on Friday, the closing bids were 30 bid at 76, 32 offered at 77, with the last trade made at 76 1/8. In addition, the price range for the last 52 weeks is shown, with the high being 90 ¾ and the low 73 1/2.

Some of the more speculative bonds have a much larger spread. The AES 8 of 08 last traded at 69 1/2, with a bid for 4 at that price, and 15 offered at 73 7/8. The spread is very high, but at least there is a transparency so that the potential buyer or seller knows the amount of the spread.

Dan
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