Bond Newbie - Question on how to evaluate bonds
Hello everyone,
I am really interested in investing in some sort term government bonds.
Through my broker (degiro) I cannot have access to newly issued bonds but only to already circulating ones from the market. I have found this Spanish state bond ES00000122E5 that expires in 2025 with a coupon rate of 4.65% and it currently trades at 103.975€. If let's say I invest max 1000€, with the current price, I will be able to buy 9 of those in total (since one costs >100€). How much would I gain until the bond matures. My assumption is that I will be getting 4.65€*9=41.85€. Is my logic correct? I guess since it costs a bit more than 100 euros I can buy less and this is where the correction is happening compared to if I had bought the bond directly when issued. Do I understand it wrong? Moreover with my calculated current yield of 4.47%, do you see it as a good investment in government bonds?
Posted Apr 11, 2023, 11:23 AM UTC · edited