Par Bonds

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Nov 3, 2009 11:41 am

Would like to get some insight on these.  PLP specifically.



Thanks!
Nov 3, 2009 12:04 pm

I like using par bonds for younger investors or as a more aggressive debt holding in a larger portfolio. If you buy at the right time, there may be good upside with decent dividends if things stay flat.

 
IMO, PLP is decent so far as they go. Be careful to fully explain to the client how they work, however, and make sure you are buying them in a company with a relatively stable future outlook. You don't want a client freaking out when its value drops 25% (like it did today). They don't act like stocks or bonds.
 
And, of course, verify any information you read here with the home office and your FSD .
Nov 3, 2009 4:11 pm

Your FSD won't even know how to spell par bonds....at least mine didn't when I was at Jones. I used them as a supplement to the lack of inventory at Jones. I am sure with Bondnet or Joogle you have all the inventory in the world...

Nov 3, 2009 7:13 pm
noggin:

Your FSD won't even know how to spell par bonds....at least mine didn't when I was at Jones. I used them as a supplement to the lack of inventory at Jones. I am sure with Bondnet or Joogle you have all the inventory in the world...

 
LOL...there he goes again!
Nov 3, 2009 9:23 pm

Noggin,

   Interesting insight considering Jones has around 10 $25 par bonds they actually recommend and have for years.  How long ago did you leave, because I've been using recommended par bonds for around 7 years.
Nov 4, 2009 10:35 am

Rankstocks,

 
I left about a year and a half ago. My FSD was fired by Jones and part of the reason may have been in all honesty that he didn't know what he was doing. I can remember trading FSpends with him about parbonds many, many times. Even though Jones provided us as reps some research on them, he apparently would not read those reports. All kidding aside, par bonds provide a good avenue to get smaller accounts exposure to decent fixed income. I tried to use them inside IRA accounts as they made their yearly contributions.
Nov 4, 2009 9:32 pm

Dont most people call these preferreds?

Nov 5, 2009 2:54 am

why do I bother posting sometimes?  You're kidding WFAt, right?

 
noggin, I agree with you about some of our FSD's.  Absolute power trippers with little real world experience.
Nov 5, 2009 7:47 am

How can you call them bonds? Please enlighten rank...oh wise one....im just a idiout wirehouse guy.....

Nov 5, 2009 1:59 pm
WFAt:

How can you call them bonds? Please enlighten rank...oh wise one....im just a idiout wirehouse guy.....


Because unlike a preferred stock that has a declared dividend (and thus not guaranteed to be paid) a par bond has a defined coupon rate.
 
Also, PAR bonds have  a term period whereas preferreds are often (but not always) perpetual.
 
In the capital structure a PAR bond holder is superior to preferred holders.
 
They are not at all preferreds and thus should not be called preferreds.