Secondary Market (Part I): Trading with the IBKR Bond Scanner

Trading with the IBKR Bond Scanner

After a corporate bond issuance has been structured, and the deal is priced, it then resides in the secondary market, where it may be bought, sold, or held by an investor until it reaches maturity, or is called away by the issuer.

In this lesson, we’ll explore some features of corporate bonds an investor should be aware of when making a purchase, while walking you through IBKR’s Global Bond Scanner, which enables investors to locate and trade corporate bonds in the secondary market – along with other fixed income products such as CDs, US Treasuries, non-US sovereign bonds, municipal securities, and more.

There are several ways to search for a corporate bond in the IBKR Trader Workstation (TWS), but for the purposes of this course, we’ll use the Bond Scanner to perform our work.

In the Mosaic view, you can launch the Scanner from the New Window menu at the top left of the screen, then select ‘Scanners’ and ‘Bond Scanner’ from the submenus. When it pops up, you can maximize the view if needed.

In the Bond Scanner, under Instrument on the top left, select Corporate Bonds, if not already selected by default.  You will also see a host of filters to help you narrow your search, including by maturity, credit rating, coupon rate, whether the bond is callable or has a variable rate, along with the industry it’s associated with, and several other fields.

Apply some of these filters – for example, in the Moody’s rating box, select an investment-grade ‘A3’ credit rating for the bond’s minimum credit quality, then refine the search to show only bonds in the Consumer, Cyclical sector. Then perform the search.

In the results that follow, you can see the selection has been narrowed to show only those corporate securities in the desired sector with a credit rating of ‘A3’ or better as assigned by Moody’s. To make the data easier to read, you can sort any of the fields by double-clicking on a header. For this exercise, sort by company name. Now let’s take a closer look at a specific security – for example, this Home Depot bond maturing April 15, 2030:

You’ll see by the column headers that this bond carries a 2.7% coupon, its CUSIP is listed, and you can see it belongs to the Consumer, Cyclical sector that was asked for.  You can also see how this bond is trading – by both bid/ask yields and by prices.