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Nov 30, 20201 min read

what you actually get by buying Australian Government Bond | Exchange-traded Treasury Bonds (eTBs)



For example,


ASX Code: GSBM22 (click for Term Sheet)


  • Maturity date: 15-Jul-2022

  • Face value: $100

  • Coupon interest rate (p.a.): 5.75%

  • Coupon payment date: 15-Jul, 15-Jan


So how to calculate what you are going to get by investing in this treasury bond.


Today's date: 30-Nov-2020


What you get back at the end of the maturity: $100 + coupon payments


Coupon payments until the maturity from today:

  • 15-Jan-2021

  • 15-Jul-2021

  • 15-Jan-2022

  • 15-Jul-2022 (maturity date)

Coupon payment received per year: $100 * 5.75% p.a. = $5.75 per year


So,


Coupon:

  • 15-Jan-2021: $2.87

  • 15-Jul-2021: $2.88 = $5.75 (2021)

  • 15-Jan-2022: $2.87

  • 15-Jul-2022: $2.88 = $5.75 (2022)

Total coupon payment: $11.50

Face value: $100.00

Payment at maturity: $111.50


However, the market price of Australian government bond


Specifically, the market price of GSBM22: $111.34


Payment at maturity - Market price: $111.50 - $111.34 = ???


1 - (111.34 / 111.50) = 0.001% return


Lesson: It's hard to make money :)



Reference:



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