1. Classification of Fixed-Income Markets
a. describe classifications of global fixed-income markets;
b. describe the use of interbank offered rates as reference rates in floating-rate debt;
When classifying fixed-income markets, what are three types of issuers?
Three major market sectors are the government and government-related sector, the corporate sector, and the structured finance sector.
What are bond classifications in regards to credit quality?
A bond can be considered investment-grade or high-yield based on the issuer's creditworthiness (as judged by credit ratings agencies).
What are different types of maturities for bonds?
Money market bonds have original maturities ranging from overnight to one year. Capital market bonds have original maturities longer than one year.
What are different types of bond coupons?
Some bonds pay a fixed rate of interest while others pay a floating rate of interest.
What are Interbank offered rates?
Interbank offered rates are sets of rates that reflect the rates at which banks believe they could borrow unsecured funds from other banks in the interbank market for different currencies and maturities. These rates may be used as reference rates for floating-rate bonds, mortgages, and derivatives.
What are the different types of bond markets, based on geography?
There are domestic, foreign and Eurobond markets. Investors also make a distinction between the developed and emerging bond markets. Emerging market bonds usually exhibit higher risk than developed markets bonds.