Expert: Gina Boykin - 1/22/2009

Question
Hi.  I live in Canada, but sometimes invest in US securities. I got clobbered in common shares last year!  So, now i would like to research Cdn and US corporate bonds.  My question is: do you know where i can get uptodate info on corporate bond issues, like the current price, on the internet?  I couldn't find anything in Yahoo Finance.  I am interested in income - do you think corp. bonds are safer than common shares at this time?
Thanks,  Bruce

Answer
Try investinginbonds.com for bond rates as well as other helpful information about bonds.  

For your second question, it depends on what you’re looking for.  If a company files bankruptcy, bondholders are paid before stockholders; however, the type of bond you have will determine your order in line to be paid, and still won’t get the full bond face value.  Secured bonds are “safer” than unsecured bonds, because they are paid first (and will get a larger percentage of the original bond amount).  So, if you’re concerned about a company filing bankruptcy, you have less risk with bonds, but bonds are not risk-free.

There is also market risk with bonds, just like with stocks.  Interest rates are not going to get much lower – eventually they will go up.  When they do, the market price of bonds will decrease (because people can get a better rate investing in new bonds at the higher interest rate).  If you have a bond fund, your fund value will go down.  If you have an individual bond and plan to sell before it matures, the bond price will go down.  The only way to avoid this risk is to buy bonds individually AND hold them until maturity.

Another risk has to do with the health of the underlying company.  The best way to reduce this risk is to buy the highest rated bonds.