PRICING SERVICES
ENSURE TRANSPARENCY
AND CONSISTENCY

Meaningful transparency is critical. Regulations require more detailed disclosures and stricter risk measurement. That’s why we deliver accurate pricing for mutual funds, money managers, hedge funds, internal pricing groups, auditors and regulators, whether your priority is quality, cost, transparency or coverage.

Basic Pricing Services

Drive enterprise workflows with credible, transparent prices across a broad spectrum of financial instruments. Bloomberg connects your firm with third-party sources, including exchanges, TRACE and dealer quotes, as well as market consensus prices for liquid corporate and government bonds.

BLOOMBERG VALUATION SERVICE (BVAL)

Out of the millions of securities that exist, most are thinly traded and difficult to price. Traditionally, a few broker quotes were sufficient to justify value. Bloomberg understands the need to increase rigor and transparency when establishing fair and independent asset evaluations. The Bloomberg Valuation Service (BVAL) draws on contributed market data from thousands of sources. These broad observations, together with innovative analytics, terms and high-quality data, produce objective third-party price valuations for fixed-income asset classes and derivative securities.

BVAL is the evaluated pricing service from Bloomberg, a leader in quality data and analytics. BVAL’s benefits go beyond traditional asset evaluation services with objective, independent evaluation capabilities for both traditional and hard-to-price assets. Coverage includes:

BVAL Fixed Income

  • Government, supranational, agency and corporate (GSAC) bonds
  • Municipal bonds
  • Mortgage bonds

BVAL Derivatives

  • OTC derivatives
  • Structured notes

Most important, BVAL delivers extensive value across the enterprise. BVAL not only provides rigorous, transparent and defensible pricing. It helps you identify, measure, monitor and manage valuation uncertainties. You know Bloomberg for high-quality data, cutting-edge technology and outstanding 24/7 service. These three elements combine to make BVAL the clear choice for evaluated pricing.

RAISE EXPECTATIONS
FOR DATA TRANSPARENCY
AND QUALITY IN PRICING

REAL PRICING FROM REAL INDUSTRY EXPERTS

BVAL was developed by a team of seasoned industry experts with hundreds of years of collective experience in trading, fund management, compliance and risk management, and pricing. Our team has worked on the client side and for other pricing services, so they know firsthand how regulatory changes, volatility and other factors affect your ability to evaluate positions effectively.

BVAL is the next generation of evaluated pricing. It covers all fixed-income asset classes, providing the transparency firms need for auditing, regulation and client service. For each class, BVAL maximizes the use of live market observations and provides a clear delineation of market-based and model-based pricing.

  • 2.3 million daily pricings of liquid and illiquid securities
  • 45+ models used to price illiquid bonds with relative value methodologies
  • 73 product managers
  • 55 dedicated R&D staff
  • 100+ sales consultants
  • 7 daily snapshots in Tokyo, London and New York

BVAL FOR GOVERNMENT, SUPRANATIONAL, AGENCY & CORPORATE BONDS

The global range of asset classes and bond structures is the biggest challenge in this category, which includes government, agency, supranational, investment-grade, high-yield corporate and loans securities. BVAL covers fixed- and floating-rate bonds in more than 35 countries as well as a variety of other bond structures, such as:

  • Callable
  • Step-coupon
  • Caps and floors
  • Inflation-linked
  • Strips
  • Convertible

The final BVAL price for a security in this category is derived using a three-pronged approach based on a combined sequence of proprietary BVAL algorithms.

Direct observations come first. This market data is the most current and relevant. When direct observations are insufficient to derive a price, BVAL’s correlation model uses historical data from comparable bonds. A relative value yield curve or pricing matrix may also be used.

The amount and quality of observable market data used in BVAL’s algorithms influence the BVAL Score. A high BVAL Score — measured on a scale of 1 to 10 — reflects a relatively high quantity of pricing data with little dispersion among the trades and/or indicative quotes.

BVAL FOR MUNICIPALS

Bonds issued by U.S. municipalities pose a pricing challenge because of the large number of unique instruments and issuers. Many issuers are not rated, making comparisons difficult.

For example, consider two municipalities in the same state that issue bonds of similar size: one from a small town in upstate New York, the other from New York City. The vast difference in the size of the issuers means these bonds cannot be pegged to the same pricing curve. This is a simplified example, but the permutations can expand exponentially when many bonds are in play.

Municipal bonds are typically priced using direct observation or curves drawn from observed comparables. To draw relationships between a bond to be priced and comparable instruments, BVAL compares a string of qualities and characteristics, including ratings, call protection and AMT eligibility, among numerous other factors. As a result of this granularity, BVAL constructs more than 14,000 pricing curves to choose from, ensuring the best fit for any municipal bond.

BVAL FOR MORTGAGES

Given the scope of the mortgage market, the range of factors that affect pricing and the heightened regulatory scrutiny on this sector, pricing methodologies must be thorough and justifiable. BVAL employs Bloomberg’s extensive securities database to group mortgages based on fundamental characteristics, including underlying collateral, structural features and risk profile.

BVAL models cash flows and gathers direct observations from many sources. It calculates valuations by applying sophisticated algorithms and observed market data to the cash flows generated in earlier modeling.

This methodical, logical approach enables BVAL to price each mortgage security according to its unique characteristics and behaviors, rather than through wide-ranging aggregations that lack the necessary precision and granularity.

The size, trade volume and complexity of the derivatives market create specialized challenges that have intensified regulatory scrutiny and increased reputational risk. Valuing derivative securities is particularly challenging given the complexity of models and market inputs and the variety of structures in portfolios. Accurate valuation requires both precise calibration and vast amounts of high-quality market data. BVAL provides credible, transparent and defensible valuations across a broad spectrum of derivatives and structured notes.

Our unbiased, independent valuations — based solely on inputs and data contributed from a broad range of third-party market participants — are provided through a single-point data feed. With BVAL for Derivatives, firms can count on:

Financial Expertise
Our experienced financial engineers use their extensive market knowledge to accurately implement a portfolio of established models fed with relevant inputs.

Asset Class and Product Coverage
We support current and historical valuations across the most extensive range of vanilla and difficult-to-price exotic derivatives, from the simplest equity option to the most complex hybrid structured note.

Data and Model Transparency
Integration with Excel-based model libraries and analytics available on the Bloomberg Professional® service provides a comprehensive, transparent view of models, data and market practices.

High-Quality Data and Techniques
Innovative validation practices ensure the construction of superior objects (curves, surfaces, cubes, etc.) and continuous development in mathematical modeling and quantitative methods.

Market Snapshots
Market snapshots for auditing, historical queries and risk management are available on demand, enterprise-wide.