Due Diligence (Part 1 of 3)

Study Notes:

Introduction to the IBKR Global Bond Scanner

Among the financial instruments offered in the IBKR Trader Workstation’s (TWS) Global Bond Scanner, there is a vast list of municipal bonds for over-the-counter trading, from which you can also perform yield comparisons, as well as collect a myriad of information via links to Lumesis’ DIVER Advisor Municipal Bond Reports. There, you will find a wealth of details for your fundamental analysis, including:

• Continuing disclosures,
• Credit ratings,
• Price and yield information,
• Transaction underwriters & advisors,
• DIVER Geo Scores, and
• Sector-based economic data

Search and Select a Municipal Bond in the TWS Global Bond Scanner

There are several ways to search for a municipal bond in TWS, but for the purposes of this course, we’ll use the Global 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 Global Bond Scanner, under Instrument on the top left, select US Municipal Bonds. You will also see a host of filters to help you narrow your search, including by maturity, credit rating, whether the bond is a GO, a revenue bond, whether it is subject to the Alternative Minimum Tax (AMT), along with several other fields.

Apply Filters

Apply Filters

Let’s apply some of these filters – for example, let’s include GOs in our search, and in the US state / territory drop-down box, select ‘Maine.’ Then in the Moody’s rating box, let’s select an investment-grade ‘A1’ credit rating as the minimum credit quality we want our bond to have. Then let’s perform our search.

In the results that follow, you can see we have narrowed the selection to only those State of Maine GOs that have a minimum ‘A1’ credit rating as assigned by Moody’s.

From this list, select a specific bond – for example, a 5.0% State of Maine GO that expires June 1, 2021.

The one displayed shows an illustrative ask price, but can you recall how to find the accrued interest? If you need a review, revisit Lesson #6: Secondary Market.

Create a Chart

Now that we have chosen a security in the Global Bond Scanner, we can create a chart that shows how its yield has performed over time.

Details about this Maine GO bond show that the issuance date, or dated date, was on June 22, 2016. The bond was initially sold as a 5%, five-year deal, and as we’re presenting this lesson in November 2019, the bond has been active in the secondary market for roughly three years.

To see how this bond has performed in TWS, right click on your bond entry, then select Analysis from the Submenu, then Real-time Charts from the next pop-up box.

You will then see a chart displaying the yield of the bond over time. Let’s look at the yield over a one-year time horizon:

From this chart, we can see how the bond was trading as of October 1, 2019.