Rating Agencies Love them or hate them they are here to stay
|
|
- Peter Skinner
- 5 years ago
- Views:
Transcription
1 CFA Commentary l A Member of the CFA Institute Global Network of Societies Rating Agencies Love them or hate them they are here to stay By now, anyone in Barbados who reads the newspapers or listens to news broadcasts with any regularity is familiar with the names of Standard & Poor s Financial Services (S&P) and Moody s Investor Service. These are the two credit rating agencies (CRAs) that regularly express opinions on Barbados ability to repay its foreign borrowings. Both agencies have featured prominently in local news recently because their opinions of us have not been favourable. Indeed, over the past seven years they have steadily downgraded their ratings on Barbados debt, implying that the island may not be able to repay instalments of interest and principal as they come due. That s a nice way of saying that the island is dangerously close to defaulting on debt repayment. It s not flattering news, and yet Barbados must pay these agencies to produce it. Say what? Yes, countries and companies pay substantial fees to CRAs to provide a rating, regardless of the outcome. Without such a rating, it is almost impossible to borrow money by issuing bonds and other securities in public markets. You can forget about raising US dollars in New York, sterling in London or Swiss francs in Zurich. Investors who know little or nothing about the country or company simply won t chance it. Over the long life of a bond, they are keen not only to receive a return on their money, but also the return of their money. A rating by S&P or Moody s helps them assess the risk of this not happening CFA Society Barbados 1
2 In essence, CRAs play a middleman role in the relationship between investors and entities looking to raise money. Their basic function is to evaluate the financial strength and creditworthiness of companies or countries. Put another way, ratings reflect an agency s degree of confidence that the borrower will be able to meet promised payments of interest and principal. Several factors have led to the near universal use of credit ratings in the bond markets and the dominant role of the major credit rating agencies. These include: n Development and expansion of bond portfolio management and the accompanying bond indices. What ratings mean Agencies such as S&P and Moody s use ratings systems based on the alphabet to attribute the degree of risk associated with a country s bonds, and the debt is rated at the time it is issued. (However, the creditworthiness of both the debt and the issuer is reevaluated periodically to determine if a change in rating is called for.) Credit Ratings Chart n Independent assessment of credit risk n Ease of comparison across bond issuers, issues and market segments n Regulatory and statutory reliance and usage n Issuer payment for ratings n Huge growth of debt markets For example, S&P s highest rating is AAA. The ratings then descend to AA, A, BBB, BB, B and so forth, all the way to D, with signifies that the organization is in default. A bond rated above BBB- is considered to be investment grade, whereas those rated BB+ and below (one notch below 2017 CFA Society Barbados Top 4 2
3 BBB-) is considered to be a speculative or commonly referred to as a junk bond because of the higher risk that the issuer may default. A rating of C implies substantial risks exist or that default is imminent. An AAA rating from S&P is extremely rare. There are only a handful of companies in the world, such as Exxon, Johnson & Johnson and Microsoft that qualify. Even the mighty General Electric lost its AAA rating in 2009 during the financial crisis. When it comes to countries, only Canada, Norway, Denmark, Hong Kong, Lichtenstein and Luxembourg possess an AAA without a negative outlook. Ironically, these are all relatively small countries. Others have the AAA rating but downgrades may be in the cards. S&P has the United States rated at AA+, while Moody s rates the country as Aaa, its highest rating. Moody s uses an alphabet system as well, although in a somewhat different combination that also involves numbers. For example, Aaa is its highest rating while Aa1 is a notch lower. Moody s lists nine ratings from Aaa to Baa3 that signify investment grade. Anything below is considered to be speculative, which is polite terminology for junk bonds. Ratings also influence the price and interest rates of bonds. In plain terms, the higher the rating, the lower the interest rate. Investors are prepared to take a smaller return on their investment in exchange for greater security. For companies and countries alike, paying a low interest rate means a better chance of being able to borrow more if and when they need. This ability can be a huge competitive advantage to companies who can respond quickly to opportunities because they can raise capital easily and cheaply. All of this is why it is so important for entities to keep their credit ratings within the range considered investment grade. This is particularly true for countries who wish to raise money through bonds in huge amounts that only large institutional investors could afford to buy. Many institutional investors such as banks, insurance companies, pension funds and many fixed income funds own billions of dollars worth of investment grade bonds because it is the policy of most not to include in their portfolios anything that isn t investment grade. (However, funds of many types also hold substantial amounts of junk bonds which generally yield more. At times they can reward investors with far higher returns than investment grade bonds.) An imperfect process Rating agencies stress that their ratings are opinions. Rating agencies stress that their ratings are opinions. Moody s, for example, makes it clear that its ratings are not to be construed as recommendations or the sole basis for investment decisions CFA Society Barbados Top 4 3
4 Moody s, for example, makes it clear that its ratings are not to be construed as recommendations or the sole basis for investment decisions. However, capital markets have come to expect these opinions to be extremely well informed; indeed, investors are literally betting that they are. But at times the rating agencies have come under severe criticism for poor judgment, poor financial forecasting and Also, investors have repeatedly raised the issue of conflict of interest and questioned the objectivity of the rating agencies. for being too slow to spot negative trends. They have also taken heat for being too slow to revise ratings. Such criticism was intense during the financial crisis that started in 2008, when the agencies gave investment grade ratings to complex investment products known as Collateralized Debt Obligations (CDOs). These were essentially packages of sub-prime mortgages, mortgage-backed securities and other forms of consumer debt that were bought in vast quantities by banks, pension funds and other institutional investors, often with few questions asked because of the favourable ratings. When the effect of millions of delinquent mortgages began to ripple up the investment chain these large investors realized that much of what they had bought and thought to be secure was potentially worthless. Investor fury was unleashed on the rating agencies for giving such high credit ratings to high-risk investments that were basically toxic. Such an apparent lack of due diligence on their parts had literally turned their supposed responsibility to investors on its head. Also, investors have repeatedly raised the issue of conflict of interest and questioned the objectivity of the rating agencies. Their point is that the agencies may be tempted to give more favourable ratings than deserved because of the fees they are paid. (In 2008, in a survey of investment professionals carried out by CFA Institute, 11% of respondents claimed to have seen rating agencies upgrading bond ratings under pressure from issuers.) But criticism has come from the other side as well from entities that feel they have been rated too harshly. For example, in 2011 S&P was taken to task for lowering the long-term debt of the US Government from AAA to AA+. It refused to budge even though the Government revealed the agency has made a $2 trillion error in calculating its rating. Moody s has also come under the gun for issuing negative opinions, which the entities involved insisted were not only unwarranted but unsolicited. In other words, the agency wasn t engaged to provide the service; it acted on its own accord to the detriment of the entities involved. Another criticism of the agencies is that their ratings tend to 2017 CFA Society Barbados Top 4 4
5 lag market pricing of credit. For example, because of perceived changes in creditworthiness, bond prices and credit spreads frequently move more quickly than the agencies change their ratings (or even outlooks) up or down. Bond prices and relative valuations can move every day, whereas bond ratings, appropriately, don t change that often. Even over long periods, however, credit ratings can badly lag changes in bond prices. Clearly, the rating process is imperfect. And to rub salt in the wound, there is no public appeals process against a rating agency. Be that as it may, investors and issuers of debt need the degree of certainty it more often than not provides. Love them or hate them the rating agencies are here to stay. Investopedia and Wikipedia were among sources of material used in this article. Origins of the Big Three The Securities Exchange Commission (SEC) in the United States has licensed 10 Nationally Recognized Statistical Rating Organizations (NRSROs). Of these, Standard & Poor s Financial Services, Moody s Investor Services and Fitch Ratings are known as the Big Three. Another well-known agency is A.M. Best, which focuses on insurance companies. Standard and Poor s accounts for about 42% of the credit ratings business, with Moody s in second place with about 37%. Fitch accounts for about 18%. These three agencies rate tens of trillions of dollars in securities, not only the bonds of corporations and governments but also securitized assets, which are assets that are bundled together and sold as securities to investors. They have been around for well over a century. Although Standard and Poor s was formed in 1941,when Poor s Publishing and Standard Statistics merged, its legacy firms date back to the 1860s and the days of the US railroad boom. In 1966, S&P was acquired by US publishing giant, McGraw-Hill. McGraw Hill became McGraw Hill Financial in 2013 and three years later became S&P Global Inc. Moody s was founded in 1909 under the original name of Moody s Analyses Publishing Company. In 1962, after decades of successful operation, the business was bought by Dun & Bradstreet, the US firm known globally for its ability to supply the credit histories and standing of millions of companies around the world. In 2000, Dun & Bradstreet spun off Moody s Investor Services into a separate publicly listed company. It is now officially a subsidiary of Moody s Corporation. The smallest of the Big Three, Fitch Ratings was founded in 1914 as the Fitch Publishing Company. Over the years Fitch grew steadily through the acquisition of other rating agencies until it was itself acquired by majority shareholder the Hearst Corporation. It was Fitch that introduced the rating system using the alphabet, which was later adopted and licensed by S&P 2017 CFA Society Barbados Top 4 5
6 This publication is edited by Michael Berry, CFA. Michael is a long-time charter-holder with the Chartered Financial Analyst Institute and currently sits on the board of CFA Society Barbados. He is also President and Chief Investment Officer of Pencarrek Limited, an asset management firm based in Barbados. This publication is produced by CFA Society Barbados, an association of approximately 50 local investment professionals such as portfolio managers, investment advisers and educators. We are a member society of CFA Institute, a global not-for-profit organisation of more than 145,000 investment professionals. Content by Clarity Communication. Design by mgdesignbds.com CFA Society Barbados 6
BONDS AND CREDIT RATING
BONDS AND CREDIT RATING 2017 1 Typical Bond Features The indenture - a written agreement between the borrower and a trust company - usually lists Amount of Issue, Date of Issue, Maturity Denomination (Par
More informationMunicipal Bond Basics
Weller Group LLC Timothy Weller, CFP CERTIFIED FINANCIAL PLANNER 6206 Slocum Road Ontario, NY 14519 315-524-8000 tim@wellergroupllc.com www.wellergroupllc.com Municipal Bond Basics March 06, 2016 Page
More informationCHAPTER 9 DEBT SECURITIES. by Lee M. Dunham, PhD, CFA, and Vijay Singal, PhD, CFA
CHAPTER 9 DEBT SECURITIES by Lee M. Dunham, PhD, CFA, and Vijay Singal, PhD, CFA LEARNING OUTCOMES After completing this chapter, you should be able to do the following: a Identify issuers of debt securities;
More informationChapter Seven 9/25/2018. Chapter 6 The Risk Structure and Term Structure of Interest Rates. Bonds Are Risky!!!
Chapter Seven Chapter 6 The Risk Structure and Term Structure of Interest Rates Bonds Are Risky!!! Bonds are a promise to pay a certain amount in the future. How can that be risky? 1. Default risk - the
More informationFixed income for your portfolio
Fixed income for your portfolio November 2017 2 Fixed income for your portfolio Defence Fixed income investments such as bonds are widely used in portfolios to enhance income and compliment low risk interest
More informationRisk and Term Structure of Interest Rates
Risk and Term Structure of Interest Rates Economics 301: Money and Banking 1 1.1 Goals Goals and Learning Outcomes Goals: Explain factors that can cause interest rates to be different for bonds of different
More informationFixed Income FUNDAMENTALS FOR INVESTORS
Fixed Income FUNDAMENTALS FOR INVESTORS Today s financial markets are full of ups and downs. Many investors, finding it hard to tolerate fluctuations in their portfolios, want investments that can help
More informationThe Evolution of High-Yield Bonds into a Vital Asset Class
Allianz Global Investors White Paper Series The Evolution of High-Yield Bonds into a Vital Asset Class 07/2016 Executive Summary With high-quality bond yields near all-time lows, investors have looked
More informationFUNDAMENTALS OF CREDIT ANALYSIS
FUNDAMENTALS OF CREDIT ANALYSIS 1 MV = Market Value NOI = Net Operating Income TV = Terminal Value RC = Replacement Cost DSCR = Debt Service Coverage Ratio 1. INTRODUCTION CR = Credit Risk Y.S = Yield
More informationCHAPTER 8. Valuing Bonds. Chapter Synopsis
CHAPTER 8 Valuing Bonds Chapter Synopsis 8.1 Bond Cash Flows, Prices, and Yields A bond is a security sold at face value (FV), usually $1,000, to investors by governments and corporations. Bonds generally
More informationspin-free guide to bonds Investing Risk Equities Bonds Property Income
spin-free guide to bonds Investing Risk Equities Bonds Property Income Contents Explaining the world of bonds 3 Understanding how bond prices can rise or fall 5 The different types of bonds 8 Bonds compared
More informationA guide to investing in high-yield bonds
A guide to investing in high-yield bonds What you should know before you buy Are high-yield bonds suitable for you? High-yield bonds are designed for investors who: Can accept additional risks of investing
More informationFixed-Income Insights
Fixed-Income Insights The Appeal of Short Duration Credit in Strategic Cash Management Yields more than compensate cash managers for taking on minimal credit risk. by Joseph Graham, CFA, Investment Strategist
More informationHouse Committee on Oversight
House Committee on Oversight 38 Studios Moral Obligation Bond Repayment May 8, 2014 What is RIPEC? RIPEC is an independent, nonprofit and nonpartisan public policy research and education organization.
More informationINVESTMENTS. The M&G guide to. bonds. Investing Bonds Property Equities Risk Multi-asset investing Income
INVESTMENTS The M&G guide to bonds Investing Bonds Property Equities Risk Multi-asset investing Income Contents Explaining the world of bonds 3 Understanding how bond prices can rise or fall 5 The different
More informationNOTES FROM THE VAULT June 2010
NOTES FROM THE VAULT June 2010 The Financial System after the Crisis: Structured Finance and Credit Rating Agencies Gerald P. Dwyer Center for Financial Innovation and Stability The Federal Reserve Bank
More informationCONSTELLATION NOTES SERIES 14-17, 18-21, 22-25, 30-33, AND (TOGETHER, THE NOTES AND EACH, A SERIES ) FREQUENTLY ASKED QUESTIONS
CONSTELLATION NOTES SERIES 14-17, 18-21, 22-25, 30-33, 47-48 AND 82-85 (TOGETHER, THE NOTES AND EACH, A SERIES ) FREQUENTLY ASKED QUESTIONS 26 May 2010 This document has been prepared for information only
More informationCounterparty Credit Default Swap Rates
Counterparty Credit Default Swap Rates 1 December 2017 This information is for financial advisers only and should not be presented to, or relied upon by, private investors. 1 Credit default swaps Bloomberg/Meteor
More informationCounterparty Credit Default Swap Rates
Counterparty Credit Default Swap Rates 22 June 2018 This information is for financial advisers only and should not be presented to, or relied upon by, private investors. 1 Credit default swaps Bloomberg/Meteor
More informationCounterparty Credit Default Swap Rates
Counterparty Credit Default Swap Rates 20 April 2018 This information is for financial advisers only and should not be presented to, or relied upon by, private investors. 1 Credit default swaps Bloomberg/Meteor
More informationCounterparty Credit Default Swap Rates
Counterparty Credit Default Swap Rates 27 April 2018 This information is for financial advisers only and should not be presented to, or relied upon by, private investors. 1 Credit default swaps Bloomberg/Meteor
More informationCounterparty Credit Default Swap Rates
Counterparty Credit Default Swap Rates 13 April 2018 This information is for financial advisers only and should not be presented to, or relied upon by, private investors. 1 Credit default swaps Bloomberg/Meteor
More informationBerwyn Income Fund (BERIX)
Berwyn Income Fund (BERIX) Summary Prospectus March 1, 2018 Before you invest, you may want to review the Fund s prospectus, which contains more information about the Fund and its risks. You can find the
More informationCALIFORNIA BONDS: 101
CALIFORNIA BONDS: 101 A Citizen s Guide to General Obligation Bonds 2016 EDITION JOHN CHIANG CALIFORNIA STATE TREASURER SECTION 1 BONDS 101: Q&A Q. What is a municipal bond? A. A bond is a loan. There
More informationBonds explained. Member of the London Stock Exchange
Bonds explained Member of the London Stock Exchange Killik & Co We pride ourselves on being a relationship firm. Each client has their own dedicated Broker, who acts as the single point of contact to provide
More informationPublic Affairs Monetary and Financial Policy in
Public Affairs 974-1 Monetary and Financial Policy in thewakeofthefinancialcrisis (10/4-11/12) Instructor: Prof. Menzie Chinn UW Madison Fall 2012 Outline Credit Spreads and Ratings Agencies The Term Structure
More informationTaiwan Ratings. An Introduction to CDOs and Standard & Poor's Global CDO Ratings. Analysis. 1. What is a CDO? 2. Are CDOs similar to mutual funds?
An Introduction to CDOs and Standard & Poor's Global CDO Ratings Analysts: Thomas Upton, New York Standard & Poor's Ratings Services has been rating collateralized debt obligation (CDO) transactions since
More informationMechanics and Benefits of Securitization
Mechanics and Benefits of Securitization Executive Summary Securitization is not a new concept. In its most basic form, securitization dates back to the late 18th century. The first modern residential
More informationMapping of DBRS credit assessments under the Standardised Approach
30 October 2014 Mapping of DBRS credit assessments under the Standardised Approach 1. Executive summary 1. This report describes the mapping exercise carried out by the Joint Committee to determine the
More informationFirst Trust Intermediate Duration Preferred & Income Fund Update
1st Quarter 2015 Fund Performance Review & Current Positioning The First Trust Intermediate Duration Preferred & Income Fund (FPF) produced a total return for the first quarter of 2015 of 3.84% based on
More informationRISKS ASSOCIATED WITH INVESTING IN BONDS
RISKS ASSOCIATED WITH INVESTING IN BONDS 1 Risks Associated with Investing in s Interest Rate Risk Effect of changes in prevailing market interest rate on values. As i B p. Credit Risk Creditworthiness
More informationAXA PREMIER VIP TRUST Target 2025 Allocation Portfolio Class A, B and K Shares
AXA PREMIER VIP TRUST Target 2025 Allocation Portfolio Class A, B and K Shares Summary Prospectus dated May 1, 2018 Before you invest, you may want to review the Portfolio s Prospectus, which contains
More informationA Guide to Investing In Corporate Bonds
A Guide to Investing In Corporate Bonds Access the corporate debt income portfolio TABLE OF CONTENTS What are Corporate Bonds?... 4 Corporate Bond Issuers... 4 Investment Benefits... 5 Credit Quality and
More informationESF Securitisation. Data Report
ESF Securitisation Data Report Autumn 2007 www.europeansecuritisation.com European Securitisation Forum St. Michael s House 1 George Yard London EC3V 9DH T +44.20.77 43 93 11 F +44.20.77 43 93 01 www.europeansecuritisation.com
More informationArnaud de Servigny and Olivier Renault, Measuring and Managing Credit Risk
P1.T4. Valuation & Risk Models Arnaud de Servigny and Olivier Renault, Measuring and Managing Credit Risk Bionic Turtle FRM Study Notes Reading 33 By David Harper, CFA FRM CIPM www.bionicturtle.com DE
More informationCredit Rating Agencies ESMA s investigation into structured finance ratings
Credit Rating Agencies ESMA s investigation into structured finance ratings 16 December 2014 ESMA/2014/1524 Date: 16 December 2014 ESMA/2014/1524 Table of Contents 1 Executive Summary... 4 2 Who should
More informationHSBC Portfolios - World Selection 2
HSBC Portfolios - World Selection 2 J Share Class ACHGBP 31 Oct 2018 ACHGBP 31/10/2018 Fund Objective and Strategy Investment Objective The Fund aims to provide long term total returns (meaning income
More informationBackward-Looking Municipal Bond Ratings: Rating the Raters
Backward-Looking Municipal Bond Ratings: Rating the Raters The national economy is showing signs of life, state and local tax receipts are on the rise, local budgets are returning to balance and... Moody
More informationCONSTELLATION NOTES SERIES 8-9, 14-17, 18-21, 22-25, 30-33, AND (TOGETHER, THE NOTES AND EACH, A SERIES ) FREQUENTLY ASKED QUESTIONS
CONSTELLATION NOTES SERIES 8-9, 14-17, 18-21, 22-25, 30-33, 47-50 AND 82-85 (TOGETHER, THE NOTES AND EACH, A SERIES ) FREQUENTLY ASKED QUESTIONS 23 Sep 2009 This document has been prepared for information
More information4. Credit markets. (Chart 28) Corporate bond spreads (Japan) % points 0.6. Aa A Baa
. Credit markets Credit spreads remained at extremely tight levels (Chart 8). The favorable environment for financing through products such as CPs, corporate bonds, syndicated loans and securitized products
More informationThe Universal Institutional Funds, Inc.
Class I Prospectus April 29, 2016 The Universal Institutional Funds, Inc. Core Plus Fixed Income Portfolio Above-average total return over a market cycle of three to five years by investing primarily in
More informationCredit Ratings and Securitization
Credit Ratings and Securitization Bachelier Congress June 2010 John Hull 1 Agenda To examine the derivatives that were created from subprime mortgages To determine whether the criteria used by rating agencies
More informationLet s just consider what the rating is trying to interpret and convey
The Litmus View the perils of ineffective use of ratings It is commonly argued that a major driver of the financial crisis was an over-reliance on ratings; that the blind acceptance of rating agency views
More informationThe Credit Rating Agencies: How Did We Get Here? Where Should We Go?
The Credit Rating Agencies: How Did We Get Here? Where Should We Go? Lawrence J. White Stern School of Business New York University Lwhite@stern.nyu.edu Presentation for Competition Policy International
More informationRisks. Complex Products. General risks of trading. Non-Complex Products
We offer a wide range of investments, each with their own risks and rewards. The following information provides you with a general description of the nature and risks of the investments that you can trade
More informationTHE GLENMEDE FUND, INC. THE GLENMEDE PORTFOLIOS
THE GLENMEDE FUND, INC. THE GLENMEDE PORTFOLIOS Prospectus February 29, 2016 Money Market Portfolios Government Cash Portfolio (GTGXX) Tax-Exempt Cash Portfolio (GTCXX) Bond Portfolios Core Fixed Income
More informationA CLEAR UNDERSTANDING OF THE INDUSTRY
A CLEAR UNDERSTANDING OF THE INDUSTRY IS CFA INSTITUTE INVESTMENT FOUNDATIONS RIGHT FOR YOU? Investment Foundations is a certificate program designed to give you a clear understanding of the investment
More informationBank Loans: Looking Beyond Interest Rate Expectations
Bank Loans: Looking Beyond Interest Rate Expectations November 13, 2012 by John Bell and Kevin Perry Fixed income investors may be stymied by the current mix of interest rate projections and global macroeconomic
More informationChapter 10: Answers to Concepts in Review
Chapter 10: Answers to Concepts in Review 1. Bonds are appealing to individual investors because they provide a generous amount of current income and they can often generate large capital gains. These
More informationWhat if SA is downgraded?
Home / What if SA is downgraded? What if SA is downgraded? By Sanlam Investments 1 September 2016 Previous Next Bookmark By Melville du Plessis Portfolio manager, Fixed Interest Six ways it could impact
More informationFrequently Asked Questions (FAQ) on Credit Ratings
TM SEBI Registered RBI Accredited NSIC Empanelled Frequently Asked Questions (FAQ) on Credit Ratings 1. What is a Credit Rating? A Credit Rating is an opinion about whether an issuer of a credit commitment,
More informationHSBC Global Investment Funds - Global Asset-Backed Bond
HSBC Global Investment Funds - Global Asset-Backed Bond S Share Class AM2 AM2 31/08/2018 Fund Objective and Strategy Investment Objective The Fund invests for long-term total return (meaning capital growth
More information19 th Year of Publication. A monthly publication from South Indian Bank.
To kindle interest in economic affairs... To empower the student community... Open YAccess www.sib.co.in ho2099@sib.co.in A monthly publication from South Indian Bank 19 th Year of Publication Experience
More informationWhat makes bonds marketable... or not! And - a program that can help. Patrick Rutledge, AVP / Public Finance Relationship Manager FHLBank Atlanta
What makes bonds marketable... or not! And - a program that can help. Patrick Rutledge, AVP / Public Finance Relationship Manager FHLBank Atlanta 1 Disclaimer Certain information contained herein has been
More informationQuestions 1. What is a bond? What determines the price of this financial asset?
BOND VALUATION Bonds are debt instruments issued by corporations, as well as state, local, and foreign governments to raise funds for growth and financing of public projects. Since bonds are long-term
More informationThe Use of Ratings in the European Capital Markets
37 The Use of Ratings in the European Capital Markets by Kristian Sparre Andersen and Anders Matzen, Financial Markets Department Introduction Until now professional ratings of bond issues, etc. have been
More informationBefore the Minnesota Public Utilities Commission State of Minnesota. Docket No. E002/GR Exhibit (GET-1)
Direct Testimony and Schedules George E. Tyson, II Before the Minnesota Public Utilities Commission State of Minnesota In the Matter of the Application of Northern States Power Company for Authority to
More informationThe Mortgage Debt Market: A Tragedy
Purpose This is a role play designed to explain the mechanics of the 2008-2009 financial crisis. It is based on The Big Short by Michael Lewis. Cast of Characters (in order of appearance) Retail Banker
More informationTestimony of Jerome S. Fons Before the Committee on Oversight and Government Reform United States House of Representatives October 22, 2008
Testimony of Jerome S. Fons Before the Committee on Oversight and Government Reform United States House of Representatives October 22, 2008 Chairman Waxman, Ranking Member Davis, and Members of the Committee,
More informationI. Introduction to Bonds
University of California, Merced ECO 163-Economics of Investments Chapter 10 Lecture otes I. Introduction to Bonds Professor Jason Lee A. Definitions Definition: A bond obligates the issuer to make specified
More informationHSBC Portfolios - World Selection 2
HSBC Portfolios - World Selection 2 J Share Class AC 31 Aug 2018 AC 31/08/2018 Fund Objective and Strategy Investment Objective The Fund aims to provide long term total returns (meaning income and capital
More informationNotice to Members. Proposed Rule to Enhance Confirmation Disclosure in Corporate Debt Securities Transactions.
Notice to Members MARCH 2005 SUGGESTED ROUTING Legal and Compliance Operations Registered Representatives Senior Management Technology Training KEY TOPICS REQUEST FOR COMMENT Proposed Rule to Enhance Confirmation
More informationGuide to Credit Rating Essentials What are credit ratings and how do they work?
Guide to Credit Rating Essentials What are credit ratings and how do they work? Guide To Credit Rating Essentials Contents About this guide 3 What are credit ratings 4 Why credit ratings are useful 6 Who
More informationStandard & Poor s Ratings Services Credit Ratings, Research & Analytics
Standard & Poor s Ratings Services Credit Ratings, Research & Analytics Providing Valued Research and Opinions for Market Participants Standard & Poor s ratings are tools to evaluate credit risk, expressing
More informationM&G Short Dated Corporate Bond Fund
M&G Short Dated Corporate Bond Fund a sub-fund of M&G Investment Funds (2) Annual Short Report May 2017 For the year ended 31 May 2017 Fund information The Authorised Corporate Director (ACD) of M&G Investment
More informationDiversify Your Portfolio with Senior Loans
Diversify Your Portfolio with Senior Loans Investor Insight February 2017 Not FDIC Insured May Lose Value No Bank Guarantee INVESTMENT MANAGEMENT Table of Contents Introduction 2 What are Senior Loans?
More information22 nd Year of Publication. A monthly publication from South Indian Bank.
Experience Next Generation Banking To kindle interest in economic affairs... To empower the student community... Open YAccess www.sib.co.in ho2099@sib.co.in A monthly publication from South Indian Bank
More informationFranklin Flexible Alpha Bond Fund. Advisor Class
Franklin Flexible Alpha Bond Fund Advisor Class Absolute Return Fixed Income Product Profile Product Details 1 Fund Assets $416,313,682.95 Fund Inception Date 08/03/2015 Number of 406 Including Cash NASDAQ
More informationRating Action: TIAA-CREF, New York Life, Northwestern Mutual (Affirmation, Outlook Revision)
Rating Action: TIAA-CREF, New York Life, Northwestern Mutual (Affirmation, Outlook Revision) On December 11, Moody s Investors Service affirmed the Aaa (Exceptional) insurance financial strength ratings
More informationM Intelligence. Mutual Life Insurance Company Dividend Rates for 2018
Enhancing understanding of sophisticated planning strategies and their applications. For 2018, the four major mutual companies held the dividend interest rates on their participating whole life (WL) insurance
More informationThe Yorktown Funds. each a series of American Pension Investors Trust. Ticker Symbols Institutional Yorktown Funds Class A Class L Class
The Yorktown Funds each a series of American Pension Investors Trust Ticker Symbols Institutional Yorktown Funds Class A Class L Class YORKTOWN GROWTH FUND (formerly API Growth Fund) AFGGX APITX APGRX
More informationThis article courtesy Caseyresearch.
This article courtesy Caseyresearch. Why Isn t This Incredibly Bearish Development Making the News? Editor s Note: This is one of the most important essays you ll read all year. In this special edition
More informationThe Case for A Rated Issuers
The Case for A Rated Issuers August 31, 2012 PFM Asset Management LLC One Keystone Plaza, Suite 300 N. Front & Market Sts Harrisburg, PA 17101 (717) 232-2723 Contents Tab I Overview of the Corporate Market
More informationCity National Rochdale Municipal High Income Fund a series of City National Rochdale Funds
City National Rochdale Municipal High Income Fund a series of City National Rochdale Funds SUMMARY PROSPECTUS DATED JANUARY 31, 2019 Class: Servicing Class Class N Ticker: (CNRMX) (CNRNX) Before you invest,
More informationEconomics. Worksheet 6.3. Wall Street, Used Cars and the Market Failure of Asymmetric Information
Worksheet 6.3 Wall Street, Used Cars and the Market Failure of Asymmetric Information What do Wall Street investment bankers and used car salesmen have in common? Sometimes, the less their customers know
More informationThe Financial Crisis of 2008 and Subprime Securities. Gerald P. Dwyer Federal Reserve Bank of Atlanta University of Carlos III, Madrid
The Financial Crisis of 2008 and Subprime Securities Gerald P. Dwyer Federal Reserve Bank of Atlanta University of Carlos III, Madrid Paula Tkac Federal Reserve Bank of Atlanta Subprime mortgages are commonly
More informationThe following pages explain some commonly used bond terminology, and provide information on how bond returns are generated.
1 2 3 Corporate bonds play an important role in a diversified portfolio. The opportunity to receive regular income streams from corporate bonds can be appealing to investors, and the focus on capital preservation
More informationInvesting for income. A guide to broadening your income horizons
Investing for income A guide to broadening your income horizons TABLE OF CONTENTS Welcome to our little guide 3 Seeking income in a low rate environment 4 Putting your savings to work 6 Broaden your income
More informationM&G Short Dated Corporate Bond Fund
M&G Short Dated Corporate Bond Fund a sub-fund of M&G Investment Funds (2) Interim Short Report November 2017 For the six months ended 30 November 2017 Fund information The Authorised Corporate Director
More informationXtrackers Low Beta High Yield Bond ETF
Deutsche Asset Management Summary Prospectus January 10, 2018 Ticker: HYDW Stock Exchange: NYSE Arca, Inc. Before you invest, you may wish to review the Fund s prospectus, which contains more information
More informationMaking Securitization Work for Financial Stability and Economic Growth
Shadow Financial Regulatory Committees of Asia, Australia-New Zealand, Europe, Japan, Latin America, and the United States Making Securitization Work for Financial Stability and Economic Growth Joint Statement
More informationFederal National Mortgage Association 1 Global Notes due July 10, 2002
Federal National Mortgage Association 1 Global Notes due July 10, 2002 Yes, Mehmood, the bonds are trading very well, said Martin Scheck, Executive Director of SBC Warburg s Debt Origination team. 2 He
More informationNAIC Rating Agency Working Group Hearing. September 24, Testimony of David Marks, CUNA Mutual Group
NAIC Rating Agency Working Group Hearing September 24, 2009 Testimony of David Marks, CUNA Mutual Group Good morning and thank you for the opportunity to present my views to the NAIC Rating Agency Working
More informationFund Information. Partnering for Success. SSgA Real-Life Insight
SM SSgA Real-Life Insight Fund Information Partnering for Success For Plan Participant Use only. The information contained in this document is intended as investment education only. None of the information
More informationCredit Rating Agencies and the Credit Crisis: What Securities Attorneys Need to Know
Credit Rating Agencies and the Credit Crisis: What Securities Attorneys Need to Know April13, 2010 Agenda Introduction Presentation Steve Herscovici, Managing Principal, Analysis Group Bill Chambers, Finance
More informationTHE MORGAN STANLEY FTSE GILT BACKED GROWTH PLAN 15 INTELLIGENT INVESTING
THE MORGAN STANLEY FTSE GILT BACKED GROWTH PLAN 15 INTELLIGENT INVESTING This Plan is not capital protected. You must be prepared to lose some or all of your Initial Investment. The Plan Manager for this
More informationFixed-Income Insights
Fixed-Income Insights Reassessing Risk and Opportunity in Short-Duration Fixed Income Investors seeking attractive income in a yield-starved world with lower risk may wish to take a fresh look at short-maturity
More informationHSBC Portfolios - World Selection 2
HSBC Portfolios - World Selection 2 J Share Class ACHEUR 30 Jun 2018 ACHEUR 30/06/2018 Fund Objective and Strategy Investment Objective The Fund aims to provide long term total returns (meaning income
More informationValuing Bonds. Professor: Burcu Esmer
Valuing Bonds Professor: Burcu Esmer Valuing Bonds A bond is a debt instrument issued by governments or corporations to raise money The successful investor must be able to: Understand bond structure Calculate
More informationULSTER UNIVERSITY TREASURY MANAGEMENT POLICY
ULSTER UNIVERSITY TREASURY MANAGEMENT POLICY DOCUMENT CONTROL Document Title Treasury Management Policy Document Version V2.0 Custodian Chief Finance Officer Author Head of Financial Management Approving
More informationTreasury Select Committee Inquiry into Credit Rating Agencies Memorandum by the Investment Management Association 1
Treasury Select Committee Inquiry into Credit Rating Agencies Memorandum by the Investment Management Association 1 Executive Summary 1. A credit rating only assesses the probability of default of a financial
More informationPortfolio, Action & Research Team
Portfolio, Action & esearch Team Pat Keene May 10, 2010 Preferred Shares An Introduction Preferred Share is a class of equity that ranks senior to common equity. Preferred shares are an important source
More informationGlobal Financial Systems Chapter 10 Credit Markets
Global Financial Systems Chapter 10 Credit Markets Jon Danielsson London School of Economics 2018 To accompany Global Financial Systems: Stability and Risk http://www.globalfinancialsystems.org/ Published
More informationCredit Opinion: Radian Guaranty Inc.
Credit Opinion: Radian Guaranty Inc. Global Credit Research - 28 Nov 2012 Philadelphia, Pennsylvania, United States Ratings Category Rating Outlook Insurance Financial Strength Radian Group Inc. Rating
More informationBond Basics January 2008
Bond Basics: What Are Interest Rate Swaps and How Do They Work? Interest-rate swaps have become an integral part of the fixed-income market. These derivative contracts, which typically exchange or swap
More informationConflicts of Interest in Credit Ratings : How are they regulated?
Conflicts of Interest in Credit Ratings : How are they regulated? by Patrick Bolton Columbia University Credit ratings agencies as information intermediaries Public information Investors Commercial Banks
More informationNational Ratings Definitions
National Ratings Definitions AM Best Rating Descriptor Definition A++ Superior Assigned to companies that have, in our opinion, a superior ability to meet their ongoing insurance obligations. A++ Superior
More informationAnswers to Questions: Chapter 5
Answers to Questions: Chapter 5 1. Figure 5-1 on page 123 shows that the output gaps fell by about the same amounts in Japan and Europe as it did in the United States from 2007-09. This is evidence that
More information4091 P-01 7/14/03 7:40 AM Page 1 PART. One. Introduction to Securitization
4091 P-01 7/14/03 7:40 AM Page 1 PART One Introduction to Securitization 4091 P-01 7/14/03 7:40 AM Page 2 4091 P-01 7/14/03 7:40 AM Page 3 CHAPTER 1 The Role of Securitization Every time a person or a
More informationM&G Global Government Bond Fund a sub-fund of M&G Investment Funds (3) Annual Short Report June 2018 For the year ended 30 June 2018
M&G Global Government Bond Fund a sub-fund of M&G Investment Funds (3) Annual Short Report June 2018 For the year ended 30 June 2018 Fund information The Authorised Corporate Director (ACD) of M&G Investment
More information