credit Flashcards
The credit rating of a country or sovereign entity
gives investor insight into the level of riskassociated with investing in a particular country and also include political risks.
Sovereign credit risk
A debt security issued by a national government within a given country and denominated in a foreign currency
Sovereign Bond
Rates offered to prime banks on euro interbank terms deposit
EURIBOR (Euro Interbank offer Rate)
average interest rates established by a panel if around 50 european banks that lend and borrow from each other
EURIBOR
bond issue by international organization often multinational or quasi-govt organization w/ a purpose of promoting economic development
- worldbank
- ADB
Supranational Bond
what are the bond structures
- conventional or straight
- variable / floating rate bond
- zero coupon rate bond
- bond is maturing in specific terms & interest rate is fixed
- coupon rate (fix)
conventional or straight
The interest rate is variable; is dependent on bench marks such as Euribor and libor
floating rate bond
-that makes no periodic interest payments and is sold at a deep discount from face value
zero coupon rate bond
interest amount fluctuates in step with the market interest rates, or some other external measure
Floating rate bond
receives a return by the gradual appreciation of the security
zero coupon bond
3 reason ehy nagkakaroon ng credit transaction yung sovereign country
- tax deficit
- funding of projects
- control infusion
anything that transacted in gov’t institution
Sovereign credit
economic contraction
govt default
-exchange rate risk
cant pay its obligation to another sovereign country
sovereign risk
