Module 43.1: Types of Bonds and Issuers Flashcards
What are types of bond issuers?
households, nonfinancial corporations, governments, financial institutions.
What is considered investment grade for Moody’s, S&P, Fitch?
Moodys and Fitch are BBB and above and Moody’s are Baa3 and above.
What investor is more attracted to floating rate bonds?
institutions that have floating rate liabilities such as banks
How is LIBOR rate calculated?
rates for unsecured loans from one bank to another in the interbank money market. an averge is calculated from a survey of 18 banks’ expected borrowing rates.
What are the 7 steps of issuing a public debt offering that investment bankers help with?
1) determining funding needs
2) structuring the debt security
3) creating the bond indenture
4) naming a bond trustee
5) registering the issue with security regulators
6) assessing demand and pricing the bonds given market conditions
7) selling the bonds
how are US treasury bonds sold to the market?
through single price auctions with the majority of purchases made by primary dealers that participate with the fed.
what is a shelf registration?
bond issue is registered with securities regulators in its aggregate value with a master prospectus.
What is the secondary market for bonds?
soem government bonds will trade in exchanges, a majority of bonds are sold by a dealer or over the counter.
What is a sovereign bond?
bonds backed by the taxing power of the government, considered default risk free.
Who issues non-sovereign government bonds and what are the proceeds used for?
issed by states, provinces, counties, and entities created to fund project such as hospitals, airports etc.
What are agency or quasi-goverment bonds?
issued by entities created by national governments for specific purposes such as financing small businesses or providing mortgage financing. (Frannie Mac)>.
What are supranational bonds?
bonds issued by the world bank, the IMF, the asian development bank etc.
