Bond price = bond face value /( 1+ market interest rate) year+σ bond face value * bond interest rate /( 1+ market interest rate) year.
The bond issuance price is based on the interest cash flow of each period during the bond duration and the face value cash flow paid by the bond at maturity.
The bond issue price is the price actually paid by bond investors when they subscribe for newly issued bonds. In practice, when issuing bonds, the term and interest rate are usually determined first, and then the actual issue price is fine-tuned according to the current market interest rate level.
The issuance of a batch of bonds cannot be completed in one day, and subscribers should buy the same bond at different times. May face different market interest rates. In order to protect the interests of investors and ensure the smooth issuance of bonds, it is necessary to constantly adjust the interest rate and issue price of bonds.
Generally speaking, when the market interest rate level changes greatly, change the interest rate; When the market interest rate level is relatively stable, fine-tune the issue price. Sometimes interest rate changes are used together with fine-tuning the issue price.
In short, the actual payment price for investors to subscribe for new bonds with 200 yuan denomination can be 200 yuan, 199 yuan or 198 yuan, 20 1 yuan or 202 yuan.
Therefore, the relationship between coupon rate and market interest rate affects the issue price of bonds. When the bond coupon rate is equal to the market interest rate, the bond issue price is equal to the face value; When the bond coupon rate is lower than the market interest rate, enterprises can't attract investors if they still issue at face value, so they generally need to discount; On the other hand, when the bond coupon rate is higher than the market interest rate, enterprises still issue bonds at face value, which will increase the issuance cost, so they generally issue bonds at a premium.
In practice, the issue price calculated according to the above formula is generally the basis for determining the actual issue price, and should also be combined with the reputation of the issuing company itself.
The basic factors that determine the bond issue price are as follows:
1, bond denomination
The face value of a bond is the amount indicated in the bond market. Enterprises can diversify the face value of bonds according to the needs of different subscribers, including large face value and small face value.
2. coupon rate
Coupon rate can be divided into fixed interest rate and floating interest rate. Generally speaking, enterprises should decide which interest rate form and level to choose according to their own credit status, the company's affordability, the trend of interest rate change and the length of bond term. Wealth life
3. Market interest rate
The market interest rate is the frame of reference to measure the coupon rate of bonds, and it is also the decisive factor to determine whether the bond price is issued at face value or at a premium and the at discount.
4. Term of bonds
The longer the term, the greater the risk of creditors, the higher the interest reward they demand and the lower the issue price.