An invoice price of a bond is the price at which a bond is sold by the issuer to the initial purchaser. It is typically expressed as a percentage of the bond’s face value, and is usually set by the issuer in consultation with an investment bank. For example, a bond with a face value of $1,000 might be sold at an invoice price of 98%, resulting in a proceeds of $980 for the issuer.
The invoice price of a bond is an important factor in determining the bond’s overall cost to the investor. It is also used to calculate the bond’s yield, which is the annual return that the investor will receive from the bond. Historically, the invoice price of bonds has been influenced by a number of factors, including interest rates, inflation, and the creditworthiness of the issuer.
