Fixed Income FAQs

Which fixed income products can I buy and sell through RBC Direct Investing?

Many fixed income products can be bought or sold through the RBC Direct Investing website from 9 a.m. to 4:30 p.m. ET Monday to Friday (excluding holidays) including:

• Guaranteed investment certificates (GICs) from all major Canadian institutions (the order has to be entered online no later than 2:15pm for same day settlement. Otherwise, trade is booked for next day settlement)
• Government of Canada bonds
• Provincial and municipal government bonds
• Corporate bonds
• Strip coupons or residuals (government and corporate)
• Bankers’ acceptances
• Commercial paper
• Crown paper
• Government of Canada treasury bills (T-bills)
• Fixed income mutual funds and exchange-traded funds
• Money market funds
• Provincial savings bonds (PSBs), subject to availability, can be bought or sold over the telephone through one of our investment services representatives.
• Canada Savings Bonds are no longer offered but can be sold over the telephone through one of our investment services representatives.

What is Par Value?

Par value is the face value of a bond or a money market instrument. Par value may be different from what it costs you to purchase the item. 

For example: If the par value of a particular bond is listed at $10,000, but the market price is 99.70/$100, your cost to purchase that bond would be $9,970 (excluding accrued interest). 

When referring to guaranteed investment certificates (GICs), par value refers to the amount invested.

What is yield?

Think of yield as the return provided by a fixed income investment. The yield of a bond is based on both the purchase price of the bond and the interest (or coupon) payments received each year. Yield is often the term used to describe long-term interest rates.

What are the minimum purchase amounts for fixed income products?

Can I buy fixed income products in both registered and non-registered accounts?

Most fixed income products are eligible for all types of accounts. Occasionally, a particular bond issue will not be eligible for purchase in a registered account.

How do I find a particular fixed income product?

The fixed income search tool found on the Fixed Income Screener page allows you to find a fixed income product tailored to your needs. The basic fixed income search lets you search by product, type (such as corporate or municipal), maturity date and par (face) value. With the advanced search, you can add criteria such as yield, coupon and price.

What does it mean to have a special term on a bond, and what are the most common special terms?

A special term is a feature not found on a conventional bond that may affect your investment. To see if a bond has special terms, open a detailed quote. Special terms you may see include:

• Callable/redeemable: The issuer can redeem the bond prior to its maturity. If the bond is called, you will usually receive a price slightly higher than the face (or par) value, plus any accrued interest.
• Puttable/retractable: You have the right to receive the par value or other specified amount of the bond at a predetermined point in time before maturity. There may be more than one retraction date, with different retraction prices.
• Canada/doomsday call (e.g., "Call D+15" or "D-15"): The issuer has the right to call back the bond at any time prior to maturity at a floating yield based on the equivalent Government of Canada (GOC) bond yield. The "+ or -15" refers to the basis points paid over or deducted from the GOC bond yield. You will then receive the calculated price, or par, whichever is higher.
• Fixed floater bonds ("FF"): These are callable bonds issued by Canadian banks and insurance companies. They offer a fixed coupon up until their call date, which is usually five or 10 years before the date of maturity. If the bond is not called (at par), the issuer then pays a coupon based on a pre-specified spread over the floating banker's acceptance rate, or another short-term rate.
• "Synthetic" bonds: These are semi-annual Government of Canada bonds created by broker dealers' Capital Markets by using the cash flows from other stripped Canada issues. Because the product is essentially a Canada bond, it ranks equally with all other Government of Canada obligations. However, since the size of the issue is much smaller, it does not have the same liquidity as a regular Government of Canada bond.
• Convertible bonds: The investor has the right to convert the bonds into shares of the same company. The privilege will include the specific series of shares, the conversion ratio, period and price. The value of this feature will depend on the value of the underlying shares.
• Monthly pay: Interest payments are made monthly as opposed to the standard semi-annual payment.
• No RSP: This issue is ineligible for registered accounts.
• Non-standard settlement dates (e.g., "APR 2 SD"): The quoted date will be used as the settlement date, as opposed to the standard three-day (or two-day) settlement.

What if I can't find the specific fixed income security I wish to purchase online?

It may not be in inventory. If you can't find the security you're interested in please contact an investment services representative for assistance at 1-800-769-2560 or 416-977-1255 if outside of North America.

What rating services are used for your fixed income products?

Ratings are provided by Standard & Poors (S&P), Moody’s Investors Service and the Dominion Bond Rating Service (DBRS.)

What ratings are used for bond products and what do they mean?

Many fixed income products are rated by independent rating agencies that measure the issuer's creditworthiness or ability to make interest payments and repay principal.

Bonds rated BBB and above are considered “investment grade,” meaning the issuer has a relatively low risk of default. Non-investment grade bonds rated BB or lower, are often called “high-yield” or “junk” bonds.

What ratings are used on short-term products such as T-bills and bankers’ acceptances, and what do they mean?

Fixed income products with maturities of less than one year use a different ratings scale than that applied to bonds. RBC Direct Investing uses the short-term credit ratings of the Dominion Bond Rating Service (DBRS), a major Canadian rating agency. Ratings vary from R-1 (high grade), R2 (medium grade) and R3 (speculative grade). "High", "mid" or low are used to indicate relative standing within each rating category.

What is meant by accrued interest on the Confirm Transaction page?

Accrued interest is the interest that has accumulated on a bond since the last interest payment date. The total cost of a bond purchase will include the accrued interest. This interest will be paid to the purchaser of the bond at the next interest payment date.

Am I paying a commission when I buy or sell fixed income products?

The commissions are built into the price quoted. The trade will also reflect the estimated commission that is being charged for the order.

How are Top 10 Performers Bonds and Top GICs Rates selected and ranked?

Top 10 Performers Bonds

These pre-selected filters brought to you by RBC Capital Markets highlight the top 10 yields for bonds and strip bonds that are available to RBC Direct Investing® clients from RBC Capital Market's inventory.

The search criteria used for the two pre-selected filters are:

Top GICs Rates

The Top GICs Rates table lists the highest guaranteed investment certificate (GIC) rates for a 1 to 5 year time frame that are available to RBC Direct Investing® clients from RBC Capital Market's inventory. The GICs posted show an annual rate for 1 year GICs and compound rates for 2 to 5 year GICs.

The information is provided to clients of RBC Direct Investing Inc. as third party research. RBC Direct Investing does not provide specific investment recommendations. Investors are responsible for their own investment decisions.

To perform a custom search of Bonds or GICs please use the Fixed Income Search feature.

What does the advanced search offer?

The advanced search allows for a wider range of search criteria than the basic search method outlined above.

The advanced search adds the following criteria which can help to further refine your search parameters:

• Coupon; Select a coupon range (expressed as a percentage, example 5%) for the securities you wish to purchase.
• Yield; Select a yield range (expressed as a percentage) for the securities you wish to purchase.
• Price/$100; Choose a bond price range at a price below, at, or above $100.00 (eg. From: 98 - To: 102).

Note that "Coupon" is the actual interest amount that the bond pays semi-annually or annually whereas "Yield" incorporates both the coupon and the price of the bond in its computation.

How do I sell my fixed income product?

You can click on "Sell" next to the security on your Holdings page. This will bring you to the order entry screen which will contain some pre-coded information. (pre-populated information).

There are some products, however, where you will need to contact an investment services representative to execute your order. Examples include: GICs, Canada/Provincial Savings bonds, bond products that may not have been originally purchased at RBC Direct Investing, and US denominated fixed income securities. Please call us at 1-800-769-2560 or 416-977-1255 if outside of North America.