Mechanics of Credit-Linked Notes Credit-Linked Notes (CLNs) are financial instruments that are structured as bonds with embedded credit derivatives. These notes are designed to transfer credit risk from one party to another, typically from the issuer of the note to the investor. The mechanics of CLNs involve several key components: … …
What is Repudiation in Fixed Income? Repudiation in fixed income refers to the act of a debtor refusing to honor their financial obligations to a creditor. It occurs when the debtor denies the validity or legitimacy of the debt, either in part or in full. This can happen for various … …
The Basics of the Normal Yield Curve There are three main types of yield curves: normal, flat, and inverted. In a normal yield curve, longer-term bonds have higher yields compared to shorter-term bonds. This is because investors demand higher compensation for the increased risk associated with holding longer-term bonds. The … …
Non-Marketable Security: Definition A non-marketable security refers to a financial instrument that cannot be easily bought or sold in the secondary market. Unlike marketable securities, which can be traded on exchanges or over-the-counter markets, non-marketable securities have limited liquidity and are typically held until maturity. One of the main characteristics … …
Introduction The Fixed Income Clearing Corporation (FICC) is a financial institution that plays a crucial role in the fixed income trading market. Established in 2003, the FICC provides clearing, settlement, and risk management services for fixed income transactions. Background Prior to the establishment of the FICC, the fixed income market … …
What is an Equity-Linked Note (ELN)? An Equity-Linked Note (ELN) is a type of financial instrument that combines features of both fixed income securities and equity derivatives. It is a debt instrument issued by a financial institution, typically a bank, that offers investors the opportunity to participate in the performance … …
What is Asset-Backed Commercial Paper? Asset-Backed Commercial Paper (ABCP) is a short-term debt instrument that is backed by a pool of underlying assets. It is typically issued by special purpose vehicles (SPVs) or financial institutions to raise funds for specific purposes. Definition and Explanation ABCP is a type of commercial … …