43. Fixed-Income markets: Issuance, trading, and funding Flashcards
Underwritten offerings (also called firm commitment offerings)
are underwritten by an investment bank, which agrees to purchase any bonds that cannot be sold to investors.
in a best-efforts offering
the investment bank’s involvement is limited to acting as a broker.
a syndicated offering
is bond issue that is underwritten by a group of investment banks
grey market
is an informal forward market for upcoming bond issues
Shelf registrations
allow issuers to offer additional bonds without preparing a new offering circular.
Auctions
allow investors to bid on bonds, which helps to facilitate price discovery.
unregistered bonds
are usually private placements sold to a very small group of accredited investors
over-the-counter market
is a decentralized market in which market participants trade stocks, commodities, currencies, or other instruments directly between two parties and without a central exchange or broker. electronic platforms are used.
bid-offer spread (bid-ask spread)
represents the difference between the prices at which a dealer will buy and sell a bond
Fed funds rate
Banks with surplus funds at the central bank are allowed to loan to banks with deficit reserves at the central bank funds rate, fed funds rate in the USA
Certificates of deposit (CDs)
ave specified maturity and interest rate. They can be negotiable or non-negotiable. If a certificate of deposit is non-negotiable, investors are not allowed to sell the certificate. They will also pay a withdrawal penalty to access the money early. Negotiable CDs allow investors to sell the certificate on the open market prior to maturity. Large-denomination negotiable CDs are an important source of wholesale funds. Most have maturities less than one year.
A repo
is an agreement to sell securities and repurchase them later at a higher price. It is effectively a collateralized loan.
repo rate.
The interest rate on a repurchase agreement
