Context
- Fixed income/bonds - the holder of the security is entitled to receive annual interest payments (coupons) from the issuer. The debt will be payed at maturity date.
- Instrument to raise capital through debt
- Goverment and banking institutions are the biggest borrowers using bonds
- Contrary to common loans, bonds are tradable
Definitions
- Par value/principal : the amount that will be payed by the issuer at maturity.
- Callable bond :
- Floating bond :
- Bullet bond :
- ABS
- Covered bond
- SPV : Special purpose vehicle
-
Securitization
- Yield and price
- Discount/premium :
- Yield to maturity
- Basis points
-
secured/senior/subordinated
- negative pledge
Risks
- Reinvestment
- Interest