Fixed Income Issuance and Trading Flashcards
What is a “Credit Rating”?
A letter-grade, qualitative measure of an issuer’s ability to meet its debt obligations based on both the probability of default and the expected loss under a default scenario.
What are “Credit Rating Agencies”?
Institutions that issue and maintain credit ratings.
The largest three are S&P, Moody’s, and Fitch.
What does “Investment Grade” mean?
Bond issuers rated BBB- or better.
What is “High Yield” debt?
Bonds rated BB+ and lower.
What are “Fallen Angels”?
A company that was once IG whose credit quality has deteriorated since the issuance.
What is a “Syndicate”?
A group of lenders, typically made up of banks.
What are “Credit Facilities”?
Loan agreements with pre-specified terms and limits but fluctuating balances based on borrower-specified needs at different points in time; analogous to a credit card.
What are “Primary Bond Markets”?
Fixed-income markets comprised of issuers issuing bonds to investors to raise capital, often intermediated by third-parties such as an investment bank.
What are “Secondary Bond Markets”?
Fixed income markets comprised of investors trading existing bonds amongst themselves.
What is a “Debut Issuer”?
An issuer approaching the bond market for the first time.
What is “reopening” mean?
Issuing bonds by increasing the size of an existing bond issue with a price significantly different than par.
What is “Distressed Debt”?
Debt of mature companies in financial difficulty, in bankruptcy, or likely to default on debt.
