Corporate debt financing securities that offer their holders protection against fluctuations in the rate of inflation as measured by the consumer price index (CPI). The yields of these securities adjust monthly with respect to the current rate of inflation. |||Although they are not as common as conventional debt instruments, inflation-protected corporate debt can provide an investor with a balanced risk exposure: these securities pose all of the normal risks associated with regular corporate debt securities - such as default risk - but they remove the possibility of inflationary changes eroding their real returns.
A debt security issued by a corporation and sold to investors. The backing for the bond is usually the payment ability of the company, which is typically money to be earned from future operations. In some cases, the company's physical assets may be used as collateral for bonds.Corporate bonds are considered higher risk than government bonds. As a result, interest rates are almost always higher, even for top-flight credit quality companies. |||Corporate bonds are issued in blocks of $1,000 in par value, and almost all have a standard coupon payment structure. Corporate bonds may also have call provisions to allow for early prepayment if prevailing rates change.Corporate bonds, i.e. debt financing, are a major source of capital for many businesses along with equity and bank loans/lines of credit. Generally speaking, a company needs to have some consistent earnings potential to be able to offer debt securities to the public at a favorable coupon rate. The higher a company's perceived credit quality, the easier it becomes to issue debt at low rates and issue higher amounts of debt. Most corporate bonds are taxable with terms of more than one year. Corporate debt that matures in less than one year is typically called "commercial paper".
A fixed-income investment management style that permits managers to add instruments with greater risk and greater potential return - high-yield, global and emerging market debt, for example - to core portfolios of investment-grade bonds. |||Investment advisors will advocate building portfolios with core holdings that consist of securities and/or mutual funds that reflect market positions and performance prospects that are so strong that these holdings may be maintained in the portfolio virtually forever. Such holdings might represent as much as 75% of the portfolio. The remaining balance would then consist of higher risk holdings, which may have shorter investment horizons than the core component of the portfolio. As such, a portfolio's core investments would represent a solid foundation to which more aggressive, diversified investments could be added. With mutual funds, the core designation is used to describe categories of large-cap, mid-cap, small-cap, multi-cap and international funds that represent a blend of stocks in the value and growth investment styles.
Securities created from public sector loans or mortgage loans where the security is backed by a separate group of loans. Covered bonds typically carry a 2-10 year maturity rate and enjoy relatively high credit ratings, depending on the quality of the pool of loans ("cover pool") backing the bond. Covered bonds are often attractive to investors looking for high-quality instruments that offer attractive yields. They provide an efficient, lower-cost way for lenders to expand their business rather than issuing unsecured debt instruments. |||Covered bonds originated in the European bond market. As of 2009, 24 European countries allow covered bond instruments to be originated and sold; each country has rules in place governing the investment. The EU created guidelines for covered bond transactions in 1988 that allowed investors to invest more of their assets in covered bonds over previous limits. The U.S. entered the covered bond market in 2006 but the financial services sector meltdown of 2007-2009 slowed the market's potential growth.
A promise in an indenture, or any other formal debt agreement, that certain activities will or will not be carried out. |||The purpose of a covenant is to give the lender more security. Covenants can cover everything from minimum dividend payments to levels that must be maintained in working capital.
An investor who is extremely knowledgeable about the markets and has a reputation of making successful investments. These investors are widely known to the investing public for generating double-digit returns. Taobiz explains Investing Sage This is not a term that is applied to just anyone - an investing sage must be worthy of such accolades. The most famous investing sage is Warren Buffett, who is sometimes referred to as the "Oracle of Omaha". His highly successful investment strategy has made his shareholders incredibly wealthy.
The total amount of money that was endowed into a company by the shareholders, bondholders and all other interested parties. Invested capital is often determined by adding the total debt and lease obligations to the amount of equity in the firm and then subtracting the non-operating cash and investments. Invested capital must be calculated, and there are multiple ways to calculate this figure. It will not be listed on the company's financial statement. Taobiz explains Invested Capital Companies must earn more than it costs them to use the invested capital provided by bondholders, shareholders and other financing sources, in order to earn an economic profit. Knowing a company's invested capital allows investors to use this metric to calculate measures of performance such as return on invested capital, economic value added and return on capital employed.
The purchase of treasury notes or bonds from dealers, by the Federal Reserve. |||The "coupon" refers to the coupons which are the main difference between T-notes and T-bills. The "pass" comes from when the Federal Reserve buys T-bills from dealers thus passing the bill.