Semi-Annual Bond Basis - SABB

Semi-annual...like how often you go to the dentist, if you’re good. Or how often you wash your sheets, if you’re bad.

It’s also a common way to look at bond yields. Since different bonds operate on different schedules (monthly, quarterly, etc.), it can be difficult to compare the value of bonds across the board. Investors need a standard measure...a common measure they can use to evaluate the various options in the market.

The SABB puts all these differing bonds on the same footing. It calculates the bonds as if they all operate on a semi-annual basis (twice a year).

Imagine you're a baseball scout trying to choose between two minor league players you might want to call up to the big-league squad. One hit 10 home runs in 60 games; another hit 14 home runs in 80 games. It's hard to compare them on raw numbers, since they didn't play comparable seasons. But if you transfer the numbers to a full-season basis (figure out the run rate for a 162-game season), you can compare them on the same level.

Same deal with bonds. By taking all the bonds and putting them in a semi-annual context, potential buyers can more easily compare investment opportunities.