Bond Investment Mentor

Understanding Step-Up Agency Bonds

Episode Summary

Chris explains how callable step-up agency bonds work, why the promised benefits often don't materialize, and how to evaluate whether they make sense for your portfolio.

Episode Notes

Welcome to Bond Investment Mentor! In this episode, Chris breaks down callable step-up agency bonds. He explains how these agency bonds work and how these investments could deliver less than you expect. Chris also provides a framework for analyzing step-ups using Bloomberg screens and deciding whether they actually make sense for your institution's portfolio.

In this episode:

• Market & Fed update (1:43)
• Listener question: Discount MBS investments & a yield quirk (8:28)
• Understanding callable agencies (13:40)
  • Callable step-up agency basics
  • How to evaluate them (Download: Pre-Purchase Due Diligence Checklists)
  • The challenges of call and coupon interaction
  • Developing a step-up investment approach
• Boost your investment fundamentals with Bond Basics (Learn More) (26:55)

If you have questions about anything covered in this episode, please email me at Chris @ BondInvestmentMentor.com.

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LinkedIn: Christopher Nelson, CFA