Tag: bond

U.S. Treasury definition explanation

What is U.S. Treasury?
Created in 1798, the United States Department of the Treasury is the government (Cabinet) department responsible for issuing all Treasury bonds, notes and bills. Some of the government branches operating under the U.S. Treasury umbrella include the IRS, U.S. Mint, Bureau of the Public Debt, and the Alcohol and Tobacco Tax Bureau. Read more for examples and further explanation including related video clips and also comments
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Sinking Fund Call definition explanation

What is Sinking Fund Call?
A provision allowing a bond issuer the opportunity to buy outstanding bonds from bondholders for a set rate, using money (a sinking fund) from the issuer’s earnings saved specifically for security buybacks. Because it adds doubt for investors over whether the bond will continue to pay until its maturity date, a sinking fund call is seen as an additional risk for investors. Read more for examples and further explanation including related video clips and also comments
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Registered Bond definition explanation

What is Registered Bond?
A bond whose owner is registered with the bond’s issuer. The owner’s name and contact information is recorded and kept on file with the company, allowing it to pay the bond’s coupon payment to the appropriate person. If the bond is in physical form, the owner’s name is printed on the certificate. Most registered bonds are now tracked electronically, using computers to record owners’ information. Read more for examples and further explanation including related video clips and also comments
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Principal Only Strips – PO definition explanation

What is Principal Only Strips – PO?
A type of fixed-income security where the holder is only entitled to receive regular cash flows that are derived from incoming principal repayments on an underlying loan pool. The loan is often a pool of mortgages in the form of a mortgage-backed security (MBS). Read more for examples and further explanation including related video clips and also comments
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North American Loan Credit Default Swap Index – LCDX definition explanation

What is North American Loan Credit Default Swap Index – LCDX?
A specialized index of loan-only credit default swaps (CDS) covering 100 individual companies that have unsecured debt trading in the broad secondary markets. The LCDX is traded over the counter and is managed by a consortium of large investment banks, which provide liquidity and assist in pricing the individual credit default swaps.

The index begins with a fixed coupon rate (225 bps); trading moves the price and changes the yield, much like a standard bond. The index rolls every six months. Buyers of the index pay the coupon rate (and purchase the protection against credit events), while sellers receive the coupon and sell the protection. What is being protected is a “”credit event”” at the company, such as defaulting on a loan or declaring bankruptcy.

If a credit event occurs in one of the underlying companies, the protection is paid out via physical delivery of the debt or through a cash settlement between the two parties. The underlying company is then removed, and a new one is placed in the index to return it to 100 members. Read more for examples and further explanation including related video clips and also comments
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Municipal Securities Rulemaking Board – MSRB definition explanation

What is Municipal Securities Rulemaking Board – MSRB?
A regulating body that creates rules and policies for investment firms and banks in the issuing and sale of municipal bonds, notes and other municipal securities by states, cities and counties. Activities regulated by the MSRB include the underwriting, trading and selling of municipal securities financing public projects. Read more for examples and further explanation including related video clips and also comments
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