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Template:M intro repack Debt security: Difference between revisions
Template:M intro repack Debt security (view source)
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Comes in a few different types: | Comes in a few different types: | ||
===By type of issuer=== | ===By type of issuer=== | ||
'''[[Government bond]]s''' - issued by sovereigns so existing free of [[capital structure]], logically immune to insolvency, but practically distressingly capable of default (yes we're looking at you Argentina) and of course the | '''[[Government bond]]s''' - issued by sovereigns so existing free of [[capital structure]], logically immune to insolvency, but practically distressingly capable of default (yes we're looking at you Argentina) and of course the “who’s Queen?” gambit. <br> | ||
''' | '''Corporate bonds''': Ordinary debt instruments raised by businesses for their basic capital and operatonal requirements. <br> | ||
'''[[Structured note]]s''': Weird & wacky [[securitised derivative]]s, issued outta [[espievie]]s. <br> | '''[[Structured note]]s''': Weird & wacky [[securitised derivative]]s, issued outta [[espievie]]s. <br> | ||
===By name=== | ===By name=== | ||
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'''[[Subordinated]] notes''': Debt instruments that are not paid until the senior notes are paid in full. These typically pay a higher interest rate, are for a longer period (and are sometimes perpetual) and are there to give the issuer access to stable, long-term, cheap but otherwise equity capital-like funding. In the banking world these may form part of the banks [[Alternative tier 1 capital|alternative tier one]] or tier 2capital. | '''[[Subordinated]] notes''': Debt instruments that are not paid until the senior notes are paid in full. These typically pay a higher interest rate, are for a longer period (and are sometimes perpetual) and are there to give the issuer access to stable, long-term, cheap but otherwise equity capital-like funding. In the banking world these may form part of the banks [[Alternative tier 1 capital|alternative tier one]] or tier 2capital. | ||
===By funkiness=== | ===By funkiness=== | ||
'''Vanilla''': Normal corporate bonds just pay a fixed or floating rate and give you your money back at maturity. These are, technically, credit-linked — in that an investor’s return is dependent on the solvency of the issuer — but are otherwise pretty standardised in terms. Don’t expect investors to parse the prospectus too closely. | '''Vanilla''': Normal corporate bonds just pay a fixed or floating rate and give you your money back at maturity. These are, technically, credit-linked — in that an investor’s return is dependent on the solvency of the issuer — but are otherwise pretty standardised in terms. Don’t expect investors to parse the prospectus too closely. <br> | ||
'''[[Repackaging]]s''': | '''[[Repackaging]]s''': Proverbial “weird and wacky securitised derivatives” — jam a [[par asset swap]] in an [[espievie]] and away you go... <br> | ||
'''[[Securitisation]]s''': Monetising future cashflows, once so rock ’n’ roll that even Bowie was into it until someone had the idea of... <br> | |||
'''[[Collateralised debt obligation|Collateralised debt ob —]]''' DON’T SAY IT YOU ARE NOT ALLOWED TO SAY IT IT IS LIKE VOLDEMORT | |||