Glossary term
Bond Quote
A bond quote is a quoted bond price, yield, or bid-ask indication that shows where a bond may trade in the market.
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What Is a Bond Quote?
A bond quote is a quoted bond price, yield, or bid-ask indication that shows where a bond may trade in the market. Unlike stocks, many bonds trade over the counter rather than on a centralized exchange, so a quote can represent a dealer's bid, a dealer's offer, a recent trade, or an indicative level rather than a guaranteed execution price.
Bond quotes can look unfamiliar because many bonds are quoted as a percentage of face value. A quote of 98 means $980 for each $1,000 of face value. A quote of 102 means $1,020 for each $1,000 of face value.
Key Takeaways
- A bond quote can show price, yield, bid, ask, spread, or recent trade information.
- Bond prices are often quoted as a percentage of par value.
- The bid is what a buyer or dealer is willing to pay; the ask is what a seller or dealer is asking.
- Accrued interest may be added to the quoted clean price to determine the full settlement amount.
- Quotes can vary across dealers because many bonds trade in less transparent over-the-counter markets.
Price Quotes and Par Value
Most plain bond prices are quoted relative to par value. If par is $1,000, a price quote of 100 means the bond is at par. A quote below 100 means the bond is at a discount. A quote above 100 means the bond is at a premium.
Some bonds are quoted in decimals, while Treasury and certain institutional markets may use fractions or 32nds. Investors should confirm the quoting convention before comparing prices or calculating returns.
Clean Price and Dirty Price
The quoted bond price is often the clean price, which excludes accrued interest. The settlement price paid by the buyer may include accrued interest owed to the seller for the portion of the coupon period that has already passed. That full amount is sometimes called the dirty price.
This distinction matters because the cash paid at settlement can be higher than the quoted clean price. Investors comparing trades should know whether they are looking at clean price, accrued interest, yield, or total settlement cost.
Bid, Ask, and Spread
The bid is the price at which a dealer or buyer is willing to buy the bond. The ask, or offer, is the price at which a dealer or seller is willing to sell. The difference is the bid-ask spread. Less liquid bonds often have wider spreads, which increases the cost of entering or exiting a position.
A quote may also include yield to maturity, yield to call, current yield, spread to a benchmark, maturity date, coupon, rating, and trade size. Those details help investors compare bonds that have different coupons and maturities.
Why Quotes Can Differ
Bond quotes can differ because dealers hold different inventories, client demand varies, trade sizes differ, and some bonds trade infrequently. A small retail order may receive a different effective price than an institutional block trade. A stale quote may not reflect current market conditions.
Recent trade data can help, but it still needs context. A trade that occurred yesterday in a different size or market environment may not be a reliable price today.
Checking Fairness
Investors can compare a quote with recent trade data, similar bonds, benchmark yields, and dealer quotes when available. The goal is not to find one perfect price; it is to understand whether the quoted level is reasonable for the bond's size, rating, maturity, coupon, call features, and liquidity.
For smaller or less frequently traded bonds, the bid-ask spread can be a major part of the cost. A quote that looks close to fair value may still be expensive if the investor needs to sell soon.
Investor Takeaway
A bond quote is a starting point, not the whole trade. Investors should understand whether the quote is bid, ask, clean price, yield, or recent trade information, and should account for accrued interest, spread, liquidity, rating, maturity, and call features before deciding whether the price is fair.