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Learn Fixed income and credit products

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B Basic

Credit spreads and what they pay for9m
How corporate bonds come to market and tradePro9m
Repo and financing a bond positionPro9m

A Advanced

CDS mechanics in depthPro12m
Securitized products: mortgages and CLOsPro12m
Credit relative value: basis, index, and curvesPro12m

FlashcardsPro0/20
Basic quizPro80% passes
Advanced quizPro80% passes
Terms

Fixed income and credit products

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Flashcards Start the first lesson

The credit side of the floor: what a spread pays you for, how bonds come to market and get quoted, how a position is financed in repo, how CDS, mortgages, and CLOs work, and how a credit desk trades one instrument against another.

BBasic3 lessons

1Credit spreads and what they pay forA credit spread is the extra yield over a Treasury for lending to a company instead of the government. Part of it covers the losses you expect, and the rest pays you for illiquidity and for bearing the risk at all.9 min
2How corporate bonds come to market and tradeProCompanies sell new bonds through a syndicate in a few hours, usually at a small discount to their existing bonds. After that, bonds trade over the counter with dealers, quoted as a spread for investment grade and as a price for high yield.9 min
3Repo and financing a bond positionProAlmost no bond position on a trading desk is paid for in cash. It is financed in repo: the bond is lent as collateral against a cash loan, and the difference between what the bond earns and what the loan costs is the carry.9 min
Basic quizPro10 questions, 80% passes

AAdvanced3 lessons

4CDS mechanics in depthProA credit default swap is insurance on a company's debt. The buyer pays a fixed coupon plus an upfront amount; the seller pays par minus recovery if the company defaults. The spread, the coupon, and risky duration tie it together.12 min
5Securitized products: mortgages and CLOsProSecuritization pools loans and sells the cash flows. Agency mortgage bonds carry almost no credit risk but a lot of prepayment risk. CLOs carry credit risk, sliced into tranches that take losses from the bottom up.12 min
6Credit relative value: basis, index, and curvesProMost credit trades on a desk are one instrument against another: bond against CDS, index against its names, short maturity against long. Each leg is sized by CS01 so the trade bets on the gap, not on credit in general.12 min
Advanced quizPro10 questions, 80% passes