Bond partial buy-back - redemption

[nebfinfm]

How to record bond partial buy-back (partial redemption)
I have on record 5 bonds with nominal value $1 000 each. Now the bond issuer bought-back part of the bond, thus lowered the nominal value to 652,53. For this the bond issuer paid 381,78 ($1908,90). This equal to redemption price 109,87%. How do I record this transaction? I still have 5 bonds on record.

Many thanks
Nebfinfm

[Mark]

Hi Nebfinfm,

You would record a sell transaction, and maybe also an interest distribution for any portion that was for interest. If your prior face value was $5,000, you should have owned 50 shares. Bonds are recorded with the share balance equal to 1/100th the face value, and the price as a percentage of par. If your new face value is $3,262.65 (5 * 652.53), then you would want to own 32.6265 shares after this sell transaction. You could verify with your broker, but it seems that 347.47 of the face value was redeemed (1000 - 652.53) and the other $34.31 (381.78 - 347.47) was for interest.