The process of involving several different lenders in providing various portions of a loan. |||Mainly used in extremely large loan situations, syndication allows any one lender to provide a large loan while maintaining a more prudent and manageable credit exposure because the lender isn't the only creditor.
The sale of a mortgage in the secondary mortgage market with terms that require the seller of the mortgage to make delivery to the buyer by a certain date or pair-out of the trade. The requirement to make delivery of the mortgage or pair-out of the trade makes a mandatory mortgage lock different from a best-efforts mortgage lock. A mandatory mortgage lock also carries more risk for the seller of the mortgage. |||Mandatory mortgage locks or trades generally command a higher price in the secondary mortgage market than best-efforts locks. This is because there are fewer hedge costs associated with mandatory mortgage locks.
A fixed-income trading strategy that looks for discrepancies in the yield curve, which an investor can capitalize upon by instituting a bond swap. Discrepancies come about when current yields on a particular class of bond (corporate, municipal, etc.) don't match up with the rest of the yield curve or its historical norms. |||An investor performing a matrix trade could be looking to profit purely as an arbitrageur - by waiting for the market to "correct" a yield spread discrepancy - or by trading up for free yield, for example, by swapping debt with similar risks but different risk premiums. Yield curves can be thrown off historical patterns for any number of reasons, but most of those reasons will have a common source: uncertainty about the future of financial markets. Individual classes of bonds may also be inefficiently priced for a period of time, such as a high-profile corporate default that sends shock waves through corporate debt with similar ratings.
An bond denominated in the Australian dollar and issued on the Australian market by a foreign entity. Also known as a "kangaroo bond." |||Created in 1994, the market for matilda bonds is relatively small.
A strategy of creating investment portfolios that meet the individual needs of investors through tiered investment durations. |||Matching strategies are mainly implemented with fixed-income products. Advisors will identify the needs of investors and structure their portfolios accordingly. For example, retirees living off the income from their portfolios may require stable and continuous payments. A matching strategy would involve the strategic purchase of the securities to pay out dividends or interest at regular intervals.
When the interest rate on a loan matches (or is extremely close to) the interest rate on the source of the funds loaned out. An example of this would be if a bank accepted a $100,000 deposit and agreed to pay 5% interest on it for five years, then loaned the $100,000 out at 5.25%. A securitization lender would be a typical user of match-rate funds. |||Match-rate funds typically come with very high penalty fees for early prepayment because the intermediary has agreed to pay a specific interest rate to the depositor. If prepayment was not discouraged, the intermediary could end up paying interest after it had stopped receiving interest payments.
A term used to identify a foreign bond issued in Spain by a company that is not domiciled in Spain. Matador bonds were bonds denominated in pesetas, and were usually corporate bonds. The market for matador bonds grew rapidly between 1987 and 1999, and attracted many large local and foreign investors. The name matador originated from the bullfighters in Spain. |||Spain followed a systematic approach when accepting new foreign issuers. Spain initially only allowed AAA-rated supranationals to issue matador bonds, then a few years later allowed other sub-AAA multinationals access to Spain's debt markets, and eventually it allowed non-investment grade sovereigns to issue bonds.
High-quality debt instruments offered by the Federal Farm Credit Bank (FFCB) with a minimum face value of $25 million. |||Maturities for master notes are typically one year, paying interest that is indexed to LIBOR or another appropriate index. Due to the high value of each note, these instruments are normally used by money managers who require highly liquid, customizable investments.Master notes have a put/call feature that helps money managers:1) limit the frequency of purchases or sales of money market instruments such as discount notes2) have the daily ability to adjust total value, either upwards or downwards, by 25% of the base principal