A credit rating system for fixed-income instruments. The marketweight ranking system gives a subjective estimate of the accuracy of the current credit spread and determines whether an investment is attractive. The system includes three ranks: marketweight, overweight and underweight. The marketweight rating indicates that the current credit spread of an instrument is in line with expectations. |||Just as stocks may have a buy, sell or hold recommendation, this credit rating system will rate a debt instrument as overweight, underweight or marketweight. Being marketweight is similar to having a hold rating, whereas being overweight or underweight are equivalent to the buy and sell titles, respectively. Analysts will determine whether the current credit spread is an appropriate measure of risk for the investment and place a recommendation accordingly.
The difference between the face value of a bond issued at par and the current below-par market price, plus any original issue discount. Market discounts occur when interest rates rise, thus causing bond prices in the secondary market to fall. |||Market discount is not a set amount, but will vary from one bond to another according to market conditions. A bond sold for $1,000 will have a market discount when the yield on the bond rises and its value drops below $1,000.
A bond denominated in Canadian dollars that is sold in Canada by foreign financial institutions and companies. Similar to other foreign bonds, such as the bulldog bond, samurai bond and matilda bond, the maple bond gives domestic investors (in this case, Canadian investors) the opportunity to invest in foreign companies without worrying about the effects of currency exchange fluctuations. |||Foreign companies can use maple bond issues to raise Canadian dollars for setting up operations in Canada. When foreign content restrictions on registered investments were removed in Canada in 2005, maple bonds quickly gained in popularity. According to Statistics Canada, nearly $27 billion worth of maple bonds were invested in 2006. However, their popularity plunged as a result of the credit crisis in 2008, as Canadian investors shied away from debt sold by foreign companies.
Specified dates when a bond issuer is required to redeem all or a portion of the outstanding issues of a bond prior to its maturity. The issuer might be required to redeem all or a portion of the bonds according to the call or prepayment provisions of the of the bond contract. |||Some types of mandatory redemptions occur either on a scheduled basis, or when a specified amount of money is available in the sinking fund. Bonds may be redeemed at a specified price, usually at par, and the bondholder will receive any accrued interest to the redemption date.
A formula that expresses the measurable change in the value of a security in response to a change in interest rates. Calculated as:Where:n = number of coupon periods per yearYTM = the bond's yield to maturity |||Modified duration follows the concept that interest rates and bond prices move in opposite directions. This formula is used to determine the effect that a 100-basis-point (1%) change in interest rates will have on the price of a bond.
A slang term referring to a Government National Mortgage Association (GNMA) bond, which has a 15 year maturity. The midget is secured by mortgages backed by federal agencies. GNMA is also known as "Ginnie Mae". |||The GNMA was started in an attempt to make affordable housing available to lower income families. The term midget is a slang term used by dealers to refer to these bonds and it is not used by GNMA to formally describe any of its securities.
When a hybrid debt issue is subordinated to another debt issue from the same issuer. Mezzanine debt has embedded equity instruments (usually warrants) attached, which increase the value of the subordinated debt and allow for greater flexibility when dealing with bondholders. Mezzanine debt is frequently associated with acquisitions and buyouts, where it may be used to prioritize new owners ahead of existing owners in case of bankruptcy. |||Some examples of embedded options include stock call options, rights and warrants. In practice, mezzanine debt behaves more like stock than debt because the embedded options make the conversion of the debt into stock very attractive. Under U.S. Generally Accepted Accounting Principles (GAAP), how a hybrid security is classified on the balance sheet depends on how the embedded option is influenced by the debt portion. If the exercising of the embedded option is influenced by the structure of the debt portion in any way, then the two parts of the hybrid (debt and the embedded equity option) must be classified in both the liability and stockholders' equity sections of the balance sheet.
A model, named after the financial scholar Robert C. Merton, that was developed in the 1970s and is used today to evaluate the credit risk of a corporation's debt. Brokerage firm analysts and some investors employ the model in order to determine a company's ability to service its debt, meet its financial obligations and to gauge the overall possibility of credit default. Also referred to as, "Asset Value Model". |||Fischer Black and Myron Scholes utilized Merton's work to build out what has since become known as the Black-Scholes pricing model.Securities analysts and loan officers attempting to determine a company's credit fault risk will utilize the Merton Model as a means of analysis. The model allows the analysts to better value the company, as well as determine its ability to remain solvent through the analysis of reported debt amounts and maturity dates.
登录
工商服务
危机公关
金融律师
app开发
财税服务
金融牌照
网站建设
知识产权
企业征信
审计评估