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T-mobile Bond: https://markets.businessinsider.com/bonds/t-mobile_usa_incdl-notes_202020-26_regs-bond-2026-usu88868ag68?miRedirects=1

So the current price is 39.20.

It has a coupon of 1.5%, and will mature in February 2026. I am fairly confident that T-Mobile will not collapse in 2026 so this bond would be very safe.

If I were to purchase 10,000$ worth of this bond right now, I would get 100000/392 = 25.5 units of this bond. At maturity in 2026, when it is paid back at par value, my stake becomes 25.5 * 1000 = 25500$. That's a 40% gain in a relatively safe investment and 2026 isn't far off.

So my question is what's the catch? Why is it priced so low currently? There must be something off here but I can't see it because I'm not a financial professional. I'm tempted to put everything I have into this bond and get that easy and safe 40% gain.

ronald christenkkson
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    To your last sentence: to quote this older post in [tag:bonds], "As a general rule, when you look at the price of a publicly tradeable security, assume it is fairly priced" – AakashM Sep 04 '23 at 16:09
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    Percentage gain is (profit)/(original price), not (profit)/(final price). Also, you're missing the decimal point in 100000/392. – Acccumulation Sep 05 '23 at 04:24
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    "I am fairly confident that T-Mobile will not collapse in 2026" - see also, Enron. – Valorum Sep 05 '23 at 19:19
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    I put every single net worth I have into this bond. Reverse-mortgaged the house and using that cash as well. I'll be 40% richer in 2026 while y'all stay poor. – ronald christenkkson Sep 06 '23 at 13:22
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    @ronaldchristenkkson Let us know how that worked out. – Paul D. Waite Sep 06 '23 at 19:38
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    If you think that turning $10,000 into $25,500 is a 40% gain, then I really must advise you to brush up on your financial mathematics before making your next investment. – Tanner Swett Sep 06 '23 at 22:28
  • 10,000/25,500 = 0.39. That's how the $$$ comes in. – ronald christenkkson Sep 07 '23 at 04:58
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    @ronaldchristenkkson You've just calculated that 10,000 (what you start with) is 39% of 25,500 (what you hope to end up with). But that isn't your gain. Your gain is (25,500 - 10,000) / 10,000 = 1.55 = 155%. It should be fairly obvious if you think it through. You gain £15,500. £15,500 isn't 39% of £10,000. I hope you don't take this as being rude in any way, but I'd strongly suggest that it's unwise to be remortgaging your house to invest before you've come to terms with basic arithmetic, percentages, etc. – JBentley Sep 07 '23 at 10:12
  • I'm not even going to get into the math here because its so horrible I'm getting dizzy. But what is the source of this pricing data and why is the value decaying like a step function every month? Shouldn't it be converging toward PAR? – UpAndAdam Sep 07 '23 at 18:07

1 Answers1

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According to this site and other non-public data I have access to, this bond was redeemed early in 2021. It's not clear where the quotes that BusinessInsider is coming from, but the bond is not available to buy at any price.

I can also see that this bond was classified as a "poison put", which means that bondholders can redeem their bonds for par in the case of a "change of control". I can't tell for sure if their merger with Sprint activated these puts, but it certainly seems plausible.

D Stanley
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    Looks like it's been delisted: https://www.xetra.com/xetra-en/newsroom/xetra-newsboard/XFRA-Deletion-of-Instruments-from-Boerse-Frankfurt-25.04.2023-3511690 – littleadv Sep 04 '23 at 16:59