AG LENDING IN A CHANGING MARKET: RISING INTEREST RATES, SHIFTING POLICY, AND STRATEGIES TO COMPETE
|
|
- Lenard Stanley McGee
- 5 years ago
- Views:
Transcription
1 AG LENDING IN A CHANGING MARKET: RISING INTEREST RATES, SHIFTING POLICY, AND STRATEGIES TO COMPETE ERIC DONOVAN MANAGING DIRECTOR, INTL FCSTONE MARKETS, LLC
2 Disclaimer The trading of derivatives such as futures, options, and over-the-counter ( OTC ) products or swaps may not be suitable for all investors. Derivatives trading involves substantial risk of loss, and you should fully understand those risks prior to trading. Past financial results are not necessarily indicative of future performance. All references to futures and options on futures trading are made solely on behalf of the FCM Division of INTL FCStone Financial Inc., a member of the National Futures Association ( NFA ) and registered with the U.S. Commodity Futures Trading Commission ( CFTC ) as a futures commission merchant. All references to and discussion of OTC products or swaps are made solely on behalf of INTL FCStone Markets, LLC ( IFM ), a member of the NFA and provisionally registered with the CFTC as a swap dealer. IFM s products are designed only for individuals or firms who qualify under CFTC rules as an Eligible Contract Participant ( ECP ) and who have been accepted as customers of IFM. This material should be construed as the solicitation of trading strategies and/or services provided by the FCM Division of INTL FCStone Financial Inc., or IFM, as noted in this presentation. Neither the FCM Division of INTL FCStone Financial Inc. nor IFM is responsible for any redistribution of this material by third parties or any trading decisions taken by persons not intended to view this material. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the opinions or viewpoints of the FCM Division of INTL FCStone Financial Inc. or IFM. All forecasting statements made within this material represent the opinions of the author unless otherwise noted. Factual information believed to reliable, was used to formulate these statements of opinion; but we cannot guarantee the accuracy and completeness of the information being relied upon. Accordingly, these statements do not necessarily reflect the viewpoints employed by the FCM Division of INTL FCStone Financial Inc. or IFM. All forecasts of market conditions are inherently subjective and speculative, and actual results and subsequent forecasts may vary significantly from these forecasts. No assurance or guarantee is made that these forecasts will be achieved. Any examples given are provided for illustrative purposes only, and no representation is being made that any person will or is likely to achieve profits or losses similar to those examples. Reproduction or use in any format without authorization is forbidden. Copyright All rights reserved.
3 Why The Yield Curve Matters
4 Why The Yield Curve Matters A simple plot of short, medium and long term rates
5 Why The Yield Curve Matters A simple plot of short, medium and long term rates What does the slope tell us about current conditions?
6 Why The Yield Curve Matters The current yield curve is considered flat The market is pricing in a few more hikes over the next 18 months Followed by long term rates holding steady around 3% In theory, the cost of locking in a long term rate is low: the difference between a 5 and 30 year Treasury Bond is only 26 bp s! (2.82% vs 3.08%)
7 Why The Yield Curve Matters What Determines Long Term Rates? The Fed?
8 Why The Yield Curve Matters What Determines Long Term Rates? The Fed? Global Supply & Demand For USD Bonds * Borrowers, Investors, Speculators * U.S. Treasury Bonds, LIBOR Debt & Derivatives
9 Shaping The Yield Curve So, coming full circle: The Fed lends the bank money at an overnight floating rate The bank lends its customer money for a project at a 20 year fixed rate The bank trades with a speculator to swap his fixed for floating cash flows The speculator does an offsetting swap with a corporation who want to switch some of his bond debt to a floating rate. MAKE SENSE???
10 The Cost of Funding In the short term, Farm Credit issues debt well below LIBOR. Farm Credit looks more like a government rate in the short term (Treasuries or Fed Funds)- why?
11 The Cost of Funding Now look what happens on the 5 year loan horizon Farm Credit rates start to tick much higher than Treasuries, and even higher than LIBOR How can the market consider Farm Credit debt about the same as Treasuries for one year but higher than LIBOR at a 5 year tenor?
12 The Cost of Funding Now 30 years- what is happening to Farm Credit rates? The 30 year Farm Credit rate is now about 60 bp s above Treasuries Also notice LIBOR actually falls below Treasuries- what is happening?
13 The Cost of Funding Where does the cash come from? 3 Types of Lenders: Banks: Alternative Lenders (mostly insurance & pension funds) Farm Credit: borrow from their depositors to make loans take in premiums and put the money in a wide variety of interest yielding investments, including ag lending raise capital by issuing bonds into the public debt markets
14 The Cost of Funding Where does the cash come from? 3 Types of Lenders: Banks: Alternative Lenders (mostly insurance & pension funds) Have a long-term / short-term problem Have different risks than a lender- often willing to lend at low long term fixed rates to match liabilities Farm Credit: Significant funding advantage
15 The Cost of Funding The cost of prepayment- Treasuries and LIBOR rates are 100% non-callable, however Farm Credit bonds can often be paid early at the issuer s option Loans and bonds that can be paid off early without any penalty have a much higher coupon. Think about it from the investors perspective, if they lend at 4.00% and rates fall to 2.00%, what happens?
16 The Cost of Funding Is it more difficult to compete on rates in the short term or long term?
17 The Cost of Funding From the borrowers perspective, does it ever make sense to forfeit your right to prepay the loan?
18 The Cost of Funding As rates rise, how does demand shift in ag lending? Fixed vs floating? Yield curve + prepayment spread
19 Impact of Rising Rates Wh?
20 Impact of Rising Rates Wh? What is the value of early termination when floating LIBOR was 0.19%? Farm Credit lenders have not faced this issue for the last 9 years
21 Private Lender Playbook How do private lenders compete for credits? 1. Take more risk 2. Win on terms
22 Private Lender Playbook Pairing Interest Rate Derivatives Swaps contract used to convert a floating LIBOR rate to fixed Caps & Floors similar to put or call options on LIBOR Swaptions used to create opt-in or opt-out clause at a predetermined date in the future
23 Private Lender Playbook How do private lenders compete for credits? 1. Calendar: The 9.5 year fixed rate
24 Private Lender Playbook How do private lenders compete for credits? 1. Calendar: The 9.5 year fixed rate The 15 year loan with 7 year swap
25 Private Lender Playbook How do private lenders compete for credits? 1. Calendar: The 9.5 year fixed rate The 15 year loan with 7 year swap Irregular amortizing schedules
26 Private Lender Playbook How do private lenders compete for credits? 1. Calendar: The 9.5 year fixed rate The 15 year loan with 7 year swap Irregular amortizing schedules 15 year loan with a 3 year fixed rate
27 Private Lender Playbook How do private lenders compete for credits? 1. Calendar: The 9.5 year fixed rate The 15 year loan with 7 year swap Irregular amortizing schedules 15 year loan with a 3 year fixed rate The fixed rate operating line
28 Private Lender Playbook How do private lenders compete for credits? 2. Fee Switching: The bank offers a highly competitive loan but pairs it with a swap, or another product, where fee s are captured Example: LIBOR % with a 10 year swap at 5.00% or LIBOR % with a 10 year swap at 1.75%
29 Private Lender Playbook How do private lenders compete for credits? 3. Overly Complex Terms: 15 year loan with a fixed rate, borrowers option to convert to floating after 5 years, with a minimum interest rate of 4.50% and a prepayment closeout penalty of the greater of $250k or the market value of the loan The lender is embedding 4-5 derivatives into the loan.
30 Private Lender Playbook Key Points Oddball loan terms usually reduce the top line rate offer, making it appear more attractive The borrower is giving something up, the exact amount of which can be calculated by a derivatives trader. Its important to point out the cost of funds advantage Farm Credit has. We need to compare apples to apples on loan terms
31 Future Outlook
32 Future Outlook Current markets are discounting the FOMC forecasts by basis points Derivatives markets are very cheap right now Fed Market
33 Future Outlook Five more FED hikes in the next 2 years Increasing spread on prepayment Increasing competition on loan terms
34 Future Outlook Five more FED hikes in the next 2 years Increasing spread on prepayment Increasing competition on loan terms
35 Closing Remarks 3 Points You Must Communicate Farm Credit has lower capital costs
36 Closing Remarks 3 Points You Must Communicate Farm Credit has lower capital costs Private lenders can t compete in the long run
37 Closing Remarks 3 Points You Must Communicate Farm Credit has lower capital costs Private lenders can t compete in the long run Loan terms have a large (and growing) impact on rates
38 Closing Remarks The End of LIBOR LIBOR will be replaced by SOFR by 2021
39 Closing Remarks The End of LIBOR LIBOR will be replaced by SOFR by 2021 Better benchmark for Farm Credit funding
40 Closing Remarks The End of LIBOR LIBOR will be replaced by SOFR by 2021 Better benchmark for Farm Credit funding Very orderly transition
41 Thank You
IRFA Summit OUTLOOK PANEL. INTL FCStone Financial Inc. FCM Division. Mike Blackford Risk Management Consultant
IRFA Summit OUTLOOK PANEL INTL FCStone Financial Inc. FCM Division Mike Blackford Risk Management Consultant DISCLAIMER The trading of derivatives such as futures, options, and over-the-counter ( OTC )
More informationSLOVENIA AG CONFERENCE
SLOVENIA AG CONFERENCE Thomas.Deevy@intlfcstone.com 23 rd November 2017 INTL FCStone Ltd ( IFL ). Branch registered in Ireland No. 907174. Registered in England and Wales Company No. 5616586. Authorised
More informationVOLATILITY: FRIEND OR ENEMY? YOU DECIDE!
VOLATILITY: FRIEND OR ENEMY? YOU DECIDE! Jared Morgan INTL FCStone Financial Inc. FCM Division Kansas Farm Bureau -- Young Farmers & Ranchers Conference January 25-27, 2019 Manhattan, KS Part 1 DISCLOSURES
More informationRisk Management in the Pulp and Paper Context RISI European Conference March 7, 2017
Risk Management in the Pulp and Paper Context RISI European Conference March 7, 2017 Gary Helik Risk Management Consultant INTL FCStone Financial Inc. FCM Division 1 Disclaimer The trading of derivatives
More informationHIGHER FOR LONGER MUCH HIGHER FOR MUCH LONGER THE GREAT SAVINGS SQUEEZE OF 2018
HIGHER FOR LONGER MUCH HIGHER FOR MUCH LONGER THE GREAT SAVINGS SQUEEZE OF 2018 INTL FCStone Financial Inc. Member FINRA/MSRB/SIPC Broker Dealer Division Vincent Deluard, CFA Global Macro Strategist DISCLAIMER
More informationOTC SOFR Swaps Clearing
OTC SOFR Swaps Clearing April 17, 2018 OTC CLEARING THE WAY FORWARD 2018 CME Group. All rights reserved. 1 CME SOFR Offering The Secured Overnight Funding Rate (SOFR) What is SOFR? Endorsed by the Alternative
More informationInterest Rate Risk Management Refresher. April 29, Presented to: Howard Sakin Section I. Basics of Interest Rate Hedging?
Interest Rate Risk Management Refresher April 29, 2011 Presented to: Howard Sakin 410-237-5315 Section I Basics of Interest Rate Hedging? 1 What Is An Interest Rate Hedge? Interest rate hedges are contracts
More informationInterest Rate Risk Management Refresher. April 27, Presented to: Section I. Basics of Interest Rate Hedging?
Interest Rate Risk Management Refresher April 27, 2012 Presented to: Section I Basics of Interest Rate Hedging? What Is An Interest Rate Hedge? Interest rate hedges are contracts between parties designed
More informationFinancial Derivatives
Derivatives in ALM Financial Derivatives Swaps Hedge Contracts Forward Rate Agreements Futures Options Caps, Floors and Collars Swaps Agreement between two counterparties to exchange the cash flows. Cash
More informationWhat s the Cost of Waiting? How Interest Rate Swaps May Help Manage Your Interest Rate Exposure.
What s the Cost of Waiting? How Interest Rate Swaps May Help Manage Your Interest Rate Exposure. May 2014. Prepared by: Walt Edwards, Director, Wells Fargo Interest Rate Risk Management, Wells Fargo Securities,
More informationUNDERSTANDING AND MANAGING OPTION RISK
UNDERSTANDING AND MANAGING OPTION RISK Daniel J. Dwyer Managing Principal Dwyer Capital Strategies L.L.C. Bloomington, MN dan@dwyercap.com 952-681-7920 August 9 & 10, 2018 Dwyer Capital Strategies L.L.C.
More informationCommodity Risk Management. Commodity Risk Management. Platts FCStone Commodity Services (Europe) Ltd. May 13.
Commodity Risk Management Platts FCStone Commodity Services (Europe) Ltd. May 13 1 www.intlfcstone.com Disclaimer and Notices Commodity Risk Management 2 FCStone Commodity Services (Europe) Limited is
More informationCredit Product Primer Advancing your knowledge of bank products and services
Credit Product Primer Advancing your knowledge of bank products and services Agenda The Money Desk Advance Products Product types Recent borrowing activity summary Why Use Advances? Letters of Credit Online
More informationInterest Rate Outlook and FHLB Member Activities
Interest Rate Outlook and FHLB Member Activities Jason Hwang Director, Financial Strategies, Research, and Membership Applications Kevin Martin Manager, Member Financial Strategies January 29, 2014 Legal
More informationISDA. International Swaps and Derivatives Association, Inc. Disclosure Annex for Interest Rate Transactions
Copyright 2012 by International Swaps and Derivatives Association, Inc. This document has been prepared by Mayer Brown LLP for discussion purposes only. It should not be construed as legal advice. Transmission
More informationwill call the stocks. In a reverse-convertible bond it is the issuer who has purchased an
CHAPTER 20 Solutions Exercise 1 (a) A convertible bond contains a call option. The investor has in a sense purchased an embedded call. If the price of the equity exceeds the conversion price then the investor
More informationASSET/LIABILITY MANAGEMENT - YEAR 2
ASSET/LIABILITY MANAGEMENT - YEAR 2 Interest Rate Risk Measurement & Management Raleigh A. Trovillion Executive Vice President UMB Bank Investment Division St. Louis, MO raleigh.trovillion@umb.com 314-612-8039
More informationLeveling the Playing Field What Will Happen to LIBOR - Q3 2017
Leveling the Playing Field What Will Happen to LIBOR - Q3 2017 The financial industry is trying to create a realistic alternative to LIBOR, but it will be challenging to switch seamlessly over to a newly
More informationBalance Sheet Strategies in Today's Economic Environment May 2018
Balance Sheet Strategies in Today's Economic Environment May 2018 Scott Hildenbrand Principal/Chief Balance Sheet Strategist (212) 466-7865 shildenbrand@sandleroneill.com Current Balance Sheet Management
More informationAdvanced Investment Strategies for Public Fund Managers
Advanced Investment Strategies for Public Fund Managers Michael B. Fink, CPM Managing Director - Investments Miamisburg Ohio Office Raymond James 10050 Innovation Drive Suite 160 Miamisburg, Ohio 45342
More informationAdvanced Investment Strategies for Public Fund Managers
Advanced Investment Strategies for Public Fund Managers Michael B. Fink, CPM Managing Director - Investments Miamisburg Ohio Office Raymond James 10050 Innovation Drive Suite 160 Miamisburg, Ohio 45342
More informationRisk Management and Hedging Strategies. CFO BestPractice Conference September 13, 2011
Risk Management and Hedging Strategies CFO BestPractice Conference September 13, 2011 Introduction Why is Risk Management Important? (FX) Clients seek to maximise income and minimise costs. Reducing foreign
More informationUsing FHLBI Advance Structures to Manage Risk & Enhance Profitability
FEDERAL HOME LOAN BANK OF INDIANAPOLIS BUILDING PARTNERSHIPS. SERVING COMMUNITIES. Using FHLBI Advance Structures to Manage Risk & Enhance Profitability Todd Hargreaves Advances Manager Advance Products
More informationFinancial Institutions
Unofficial Translation This translation is for the convenience of those unfamiliar with the Thai language Please refer to Thai text for the official version -------------------------------------- Notification
More informationCash Alternatives. Liquidity Solutions. 1. Introduction
Liquidity Solutions Chief Investment Office Americas, Wealth Management 07 September 2018 6:59 pm BST Leslie Falconio, Senior Fixed Income Strategist Americas, leslie.falconio@ubs.com; Ronald Sutedja,
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 informationCourse Materials UNDERSTANDING AND MANAGING OPTION RISK
Course Materials UNDERSTANDING AND MANAGING OPTION RISK Dan Dwyer Managing Director Bloomington, Minnesota danieldwyer@firstintegritycapital.com 952-681-7920 August 10 & 11, 2017 Understanding and Managing
More informationMizuho Securities USA LLC. Financial Statements. September 30, 2017 (unaudited)
Financial Statements September 30, 2017 (unaudited) Statement of Financial Condition September 30, 2017 Contents Statement of Financial Condition... 2 Notes to Financial Statements... 3 Statement of Financial
More informationWHAT S THE GROWING RELEVANCE OF GOLD WITHIN WEALTH MANAGEMENT IN ASIA? MARTIN HUXLEY
WHAT S THE GROWING RELEVANCE OF GOLD WITHIN WEALTH MANAGEMENT IN ASIA? MARTIN HUXLEY A Leading Provider of Execution, Clearing Services and Market Intelligence - across Asset Classes across Markets - to
More informationMarch 26, Why Hedge? How to Hedge? Trends and Strategies in Interest Rate and FX Risk Management
Establishing and Maintaining an FX and Interest Rate Hedging Program: The Lifecycle of a Hedge presented by Thomas Armes, Managing Director Foreign Exchange, PNC Capital Markets Steve Goel, Assistant Treasurer,
More informationAFM 371 Winter 2008 Chapter 26 - Derivatives and Hedging Risk Part 2 - Interest Rate Risk Management ( )
AFM 371 Winter 2008 Chapter 26 - Derivatives and Hedging Risk Part 2 - Interest Rate Risk Management (26.4-26.7) 1 / 30 Outline Term Structure Forward Contracts on Bonds Interest Rate Futures Contracts
More informationFUTURES COMMISSION MERCHANT RELATED DISCLOSURE AND POLICY
FUTURES COMMISSION MERCHANT RELATED DISCLOSURE AND POLICY Futures Commission Merchant Material Conflicts of Interest The purpose of this disclosure is to provide you with information about some of the
More informationUniversity of Virginia Interest Rate Risk Management Policy Approved April 2006
University of Virginia Interest Rate Risk Management Policy Approved April 2006 Table of Contents I. Overview... 2 II. Scope and Objectives... 2 III. Oversight... 3 IV. Derivative Use Guidelines......
More informationCBOT Invoice Swap Spreads
CBOT Invoice Swap Spreads New enhancements & efficiencies coming June 6, 2016 CBOT Invoice Swap Spread Update and Enhancements On June 6, CME will offer new functionality for CBOT listed invoice spreads
More informationINTEREST RATE & FINANCIAL RISK MANAGEMENT POLICY Adopted February 18, 2009
WESTERN MUNICIPAL WATER DISTRICT INTEREST RATE & FINANCIAL RISK MANAGEMENT POLICY Adopted February 18, 2009 I. INTRODUCTION The purpose of this Interest Rate Swap and Hedge Agreement Policy ( Policy )
More informationFNCE4830 Investment Banking Seminar
FNCE4830 Investment Banking Seminar Introduction on Derivatives What is a Derivative? A derivative is an instrument whose value depends on, or is derived from, the value of another asset. Examples: Futures
More informationNOT SOFR AWAY: LIBOR TRANSITION BEGINS
Financial Services NOT SOFR AWAY: LIBOR TRANSITION BEGINS AUTHORS Oliver Wyman LIBOR Transition Team NOT SOFR AWAY: LIBOR TRANSITION BEGINS Transitioning away from LIBOR is likely to be a complex, expensive,
More informationOTC SOFR Swaps Clearing
OTC SOFR Swaps Clearing Q4 2018 OTC CLEARING THE WAY FORWARD 1 CME SOFR Offering The Secured Overnight Funding Rate (SOFR) What is SOFR? Endorsed by the Alternative Reference Rate Committee (ARRC) in June
More informationINTEREST RATE SWAP POLICY
INTEREST RATE SWAP POLICY I. INTRODUCTION The purpose of this Interest Rate Swap Policy (Policy) of the Riverside County Transportation Commission (RCTC) is to establish guidelines for the use and management
More informationBalance Sheet Strategies February 2018
Balance Sheet Strategies February 2018 Scott Hildenbrand Principal/Chief Balance Sheet Strategist (212) 466-7865 shildenbrand@sandleroneill.com Current Balance Sheet Management Themes Index 2013 2014 2015
More informationDerivatives Covering the Risk
2008 ANNUAL MEETING AND EDUCATION CONFERENCE American College of Investment Counsel New York, NY Derivatives Covering the Risk 2:45 p.m. - 4:00 p.m. October 23, 2008 MODERATOR: James M. Cain Sutherland
More informationCallability Features
2 Callability Features 2.1 Introduction and Objectives In this chapter, we introduce callability which gives one party in a transaction the right (but not the obligation) to terminate the transaction early.
More informationCHAPTER 10 INTEREST RATE & CURRENCY SWAPS SUGGESTED ANSWERS AND SOLUTIONS TO END-OF-CHAPTER QUESTIONS AND PROBLEMS
CHAPTER 10 INTEREST RATE & CURRENCY SWAPS SUGGESTED ANSWERS AND SOLUTIONS TO END-OF-CHAPTER QUESTIONS AND PROBLEMS QUESTIONS 1. Describe the difference between a swap broker and a swap dealer. Answer:
More informationIntroduction to Asset/Liability Management
Introduction to Asset/Liability Management WBA BOLT Summer Leadership Summit June 14, 2018 Presented by: Marc Gall, Vice President mgall@bokf.com 1 Agenda Asset/Liability Management and ALCO Meetings Defining
More informationMANAGING INTEREST RATE RISK: SETTING THE STAGE FOR TOMORROW MIKE DELISLE, ALM ADVISORS GROUP
MANAGING INTEREST RATE RISK: SETTING THE STAGE FOR TOMORROW MIKE DELISLE, ALM ADVISORS GROUP WVBA Convention July 29, 2014 Agenda Evaluating and Anticipating the Rate Environment Understanding Your Current
More informationAdvances Products Guide. Maximizing Your Membership
Advances Products Guide Maximizing Your Membership Mission Statement The Federal Home Loan Bank of Dallas is a member-owned financial intermediary with the primary mission of supporting homeownership,
More informationQuarterly Update on Valuation Metrics in Emerging Debt
Quarterly Update on Valuation Metrics in Emerging Debt September 2018 Carl Ross and Victoria Courmes The punch line: Due to the 26-bp spread tightening in the third quarter (to 362 bps), USD external debt
More informationManaging Interest Rate Exposure in a Rising Rate Environment July 2018
Managing Interest Rate Exposure in a Rising Rate Environment July 2018 As the era of ultra-low interest rates comes to an end, we review the US Federal Reserve and European Central Bank policy and interest
More informationAdvances Products Guide. Maximizing Your Membership
Advances Products Guide Maximizing Your Membership Mission Statement The Federal Home Loan Bank of Dallas is a member-owned financial intermediary with the primary mission of supporting homeownership,
More informationFully Hedged Stop Out Risk Warning Version 1.0
Fully Hedged Stop Out Risk Warning Version 1.0 1 P a g e DEFINATION OF FULLY HEDGING Fully hedging happens is when traders realize that their open positions might be at risk and may result in the loss
More informationQuestion 2: What are the differences between over-the-counter (OTC) markets and organized exchanges?
Question 1: What is the law of one price and arbitrage? Answer 1: The law of one price is a law that states the price of an asset should be equal in different markets once transaction costs are taken into
More informationInterest Rate Environment and FHLB Advance Strategies
Interest Rate Environment and FHLB Advance Strategies Jason Hwang Director, Financial Strategies, Research, and Membership Applications Kevin Martin Manager, Member Financial Strategies September 22, 2015
More informationModelling Counterparty Exposure and CVA An Integrated Approach
Swissquote Conference Lausanne Modelling Counterparty Exposure and CVA An Integrated Approach Giovanni Cesari October 2010 1 Basic Concepts CVA Computation Underlying Models Modelling Framework: AMC CVA:
More informationCallables/Structured Notes: Behind the Curtain Discussion with a Trading Desk
Callables/Structured Notes: Behind the Curtain Discussion with a Trading Desk GIOA 2019 Conference / March 21, 2019 George E.A. Barbar Senior Managing Director gbarbar@mesirowfinancial.com 2 Ever wonder
More informationThe demise of LIBOR What next? THE DEMISE OF LIBOR WHAT NEXT?
THE DEMISE OF LIBOR WHAT NEXT? This white paper provides a snapshot of what has been agreed to date and looks at where we are likely to go moving forward. It also considers how Calypso could help; where
More informationGlossary of Investment Terms
Glossary of Investment Terms Performance Measures Alpha: Alpha measures the difference between a portfolio s actual returns and its expected returns given its risk level as measured by its beta. A higher
More informationOutlook for 10Y JGB Auction
Japan Fixed Income August 1, 2018 Japanese report: August 1, 2018 (DSMR757) Outlook for 10Y JGB Auction Cautious bidding expected Digesting the MPM, the JGB market faces strong selling pressure as market
More informationMORTGAGE FINANCE. 49 Shades of Grey. Compliance/ Regulation. What the Increase in State-Level Enforcement Means for CA Lenders IN FOCUS:
LIBOR REPLACED BY SOFR So Far, So Good? SEE PAGE 19 MORTGAGE FINANCE Winter 2018 NEWS 49 Shades of Grey What the Increase in State-Level Enforcement Means for CA Lenders SEE PAGE 12 IN FOCUS: Compliance/
More informationJ.P. Morgan Securities LLC and Subsidiaries. (an indirect wholly-owned subsidiary of JPMorgan Chase & Co.)
Consolidated Statement of Financial Condition and Supplementary Schedules Table of Contents Page(s) Independent Auditor's Report Consolidated Statement of Financial Condition 3 Note 1. Organization 4 Note
More information1. Parallel and nonparallel shifts in the yield curve. 2. Factors that drive U.S. Treasury security returns.
LEARNING OUTCOMES 1. Parallel and nonparallel shifts in the yield curve. 2. Factors that drive U.S. Treasury security returns. 3. Construct the theoretical spot rate curve. 4. The swap rate curve (LIBOR
More informationLOANS- FIXED & VARIABLE & SWAPS. Vikas Kr. Sinha Dy.FA&CAO/C/NR
LOANS- FIXED & VARIABLE & SWAPS Vikas Kr. Sinha Dy.FA&CAO/C/NR LOANS FIXED & VARIABLE Interest rates attached to a variable rate loan are dictated by the wider economic situation, and may rise or fall
More informationPower Project Finance Market
Power Project Finance Market Burns & Roe 22nd Annual Energy Seminar Powering the Future Beyond Uncertainty Weehawken, NJ April 23, 2014 Donald Kyle, Senior Managing Director, GE Capital Markets, Inc. Imagination
More informationFNCE4830 Investment Banking Seminar
FNCE4830 Investment Banking Seminar Introduction on Derivatives What is a Derivative? A derivative is an instrument whose value depends on, or is derived from, the value of another asset. Examples: Futures
More informationFour steps to making your first trade
Four steps to making your first trade AN INTRODUCTION TO TRADING CURRENCIES A FOREX.com educational guide FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association
More informationRemapping the Flow of Funds
Remapping the Flow of Funds Juliane Begenau Stanford Monika Piazzesi Stanford & NBER April 2012 Martin Schneider Stanford & NBER The Flow of Funds Accounts are a crucial data source on credit market positions
More informationSBA Securities A Strategic Addition to your Portfolio
Objectives History & Characteristics SBA Securities A Strategic Addition to your Portfolio Fred Eisel Chief Investment Officer Investment Guidelines & Analysis Examples Other considerations & best practices
More informationIntroduction to the 3 Month JIBAR Futures Contract
Introduction to the 3 Month JIBAR Futures Contract DERIVATIVE MARKET Interest Rate Derivatives JIBAR Futures www.jse.co.za Johannesburg Stock Exchange An introduction to interest rate risk The level of
More informationYield curve and credit spreads signal low US recession risk
= Yield curve and credit spreads signal low US recession risk Many market participants are fearful that the narrowing gap between the yield on the 10-year and 2-year Treasury notes signals that the US
More informationGlossary for Retail FX
Glossary for Retail FX This glossary has been compiled by CME from a number of sources. The definitions are not intended to state or suggest the correct legal significance of any word or phrase. The sole
More informationLoan Pricing Structure and the Nature of Interest Rates
Loan Pricing Structure and the Nature of Interest Rates S. Blake Scharlach Senior Vice President / Director of Capital Markets Sales TIB- The Independent BankersBank, N.A. S. Blake Scharlach Blake joined
More informationGetting Started: Defines terms that are important to know for building a yield curve.
Word Capital Open Source Asset Management 408 West 14 th Street, 2F New York, NY 10014 www.word.am www.wordcapital.com US Yield Curve Tutorial Jake Roth Caroline Davidson Tools Needed 1 Microsoft Excel
More informationBuyer Beware: Investing in VIX Products
Buyer Beware: Investing in VIX Products VIX 1 based products have become very popular in recent years and many people identify the VIX as an investor fear gauge. Products based on the VIX are generally
More informationOPTION MARKETS AND CONTRACTS
NP = Notional Principal RFR = Risk Free Rate 2013, Study Session # 17, Reading # 63 OPTION MARKETS AND CONTRACTS S = Stock Price (Current) X = Strike Price/Exercise Price 1 63.a Option Contract A contract
More informationInterest Sensitive Fixed Income Market Data
Interest Sensitive Fixed Income Market Data April 2013 NORTH AMERICA KEVIN FLANAGAN Morgan Stanley Wealth Management Chief Fixed Income Strategist Managing Director kevin.flanagan@morganstanley.com +1
More informationIntroduction to Interest Rate Markets
Introduction to Interest Rate Markets Tanweer Akram, PhD Jan 23, 2018, SANEM, Dhaka, BANGLADESH 0 IMPORTANT DISCLAIMER AND DISCLOSURE Disclaimer: The author s institutional affiliation is provided solely
More informationSwaps. Bjørn Eraker. January 16, Wisconsin School of Business
Wisconsin School of Business January 16, 2015 Interest Rate An interest rate swap is an agreement between two parties to exchange fixed for floating rate interest rate payments. The floating rate leg is
More informationTHE CLEARWATER GUIDE TO ADDITIONAL ASSET CLASSES. Investment Accounting and Reporting Considerations
ADDITIONAL ASSET CLASSES THE AND CONSIDERATIONS CLEARWATER GUIDE TO NON-TRADITIONAL ASSET CLASSES Investment Accounting and TABLE OF CONTENTS INTRODUCTION 2 GUIDE TO THE GUIDE 3 THE ASSET TYPES Direct
More information1- Using Interest Rate Swaps to Convert a Floating-Rate Loan to a Fixed-Rate Loan (and Vice Versa)
READING 38: RISK MANAGEMENT APPLICATIONS OF SWAP STRATEGIES A- Strategies and Applications for Managing Interest Rate Risk Swaps are not normally used to manage the risk of an anticipated loan; rather,
More informationDear Shareholder: INVESTMENT OBJECTIVE
2008 ANNUAL REPORT Dear Shareholder: The Puerto Rico AAA Portfolio Bond Fund II, Inc. (the Fund ) is pleased to present its Annual Report to Shareholders for the fiscal year ended June 30, 2008. INVESTMENT
More informationINTRODUCTION TO YIELD CURVES. Amanda Goldman
INTRODUCTION TO YIELD CURVES Amanda Goldman Agenda 1. Bond Market and Interest Rate Overview 1. What is the Yield Curve? 1. Shape and Forces that Change the Yield Curve 1. Real-World Examples 1. TIPS Important
More informationPublic Debt Strategy in Mexico
Public Debt Strategy in Mexico 3rd OECD-China Forum on Public Debt Management and Government Securities Markets September 2006, Beijing, China www.hacienda.gob.mx/ucp 2 Index 1. Debt Management Strategy
More informationInterest Rate Swaps. Revised
Interest Rate Swaps Interest rate swaps allow fixed coupon bonds to be transformed into floating coupon bonds or vice versa. This can be useful for the purpose of hedging, speculating, or achieving lower
More informationAre You Prepared for Rising Interest Rates?
Are You Prepared for Rising Interest Rates? May 21, 2018 by Jason Bloom of Invesco Defined maturity bond funds ETFs may provide a compelling option for a rising interest rate environment Interest rates
More informationBNP Paribas Prime Brokerage, Commodity Futures. Clearing Model. Omar Oliver
BNP Paribas Prime Brokerage, Commodity Futures Clearing Model Omar Oliver Contents 1.The Futures Commission Merchant FCM model 2.Futures Clearing Mechanism 3.Clearing compared to Bilateral 4.Regulation
More informationLecture Materials ASSET/LIABILITY MANAGEMENT YEAR 2
Lecture Materials ASSET/LIABILITY MANAGEMENT YEAR 2 Raleigh A. Andy Trovillion Executive Vice President UMB Bank St. Louis, Missouri raleigh.trovillion@umb.com 800-433-5962 August 1, 2017 INTEREST RATE
More informationLiquidity is Relevant Again
Liquidity is Relevant Again April 2019 Not FDIC Insured May Lose Value No Bank Guarantee Not NCUA or NCUSIF insured. May lose value. No credit union guarantee. For institutional use only. l 2019 FMR LLC.
More informationDraft comments on DP-Accounting for Dynamic Risk Management: a Portfolio Revaluation Approach to Macro Hedging
Draft comments on DP-Accounting for Dynamic Risk Management: a Portfolio Revaluation Approach to Macro Hedging Question 1 Need for an accounting approach for dynamic risk management Do you think that there
More informationBorrowers Objectives
FIN 463 International Finance Cross-Currency and Interest Rate s Professor Robert Hauswald Kogod School of Business, AU Borrowers Objectives Lower your funding costs: optimal distribution of risks between
More informationAdvanced Interest Rate Derivatives This course can also be presented in-house for your company or via live on-line webinar
Advanced Interest Rate Derivatives This course can also be presented in-house for your company or via live on-line webinar The Banking and Corporate Finance Training Specialist Course Objectives The broad
More informationInterest Rate Environment and FHLB Advance Strategies
Interest Rate Environment and FHLB Advance Strategies Jason Hwang VP / Director, Planning and Research Kevin Martin VP / Member Financial Strategies February 10, 2016 This webinar is being recorded Disclaimer
More informationFHLB Symposium. Scott Buchta Head: Fixed Income Strategy. Tuesday, August 21st, 2018 Indianapolis Tuesday August 28 th, 2018 Grand Rapids
FHLB Symposium Scott Buchta Head: Fixed Income Strategy Tuesday, August 21st, 2018 Indianapolis Tuesday August 28 th, 2018 Grand Rapids FIStrategy@breancapital.com Table of Contents I. Housing Market Overview
More informationInterest Sensitive Fixed Income Market Data
Interest Sensitive Fixed Income Market Data NORTH AMERICA April 2014 KEVIN FLANAGAN Morgan Stanley Wealth Management Chief Fixed Income Strategist Managing Director kevin.flanagan@morganstanley.com +1
More informationINVESTOR PRESENTATION
INVESTOR PRESENTATION 2 nd Quarter 2018 NASDAQ: INTL Disclaimer This presentation contains forward-looking statements within the meaning of "forward-looking statements" within the meaning of Section 27A
More informationIntroduction to Eris Exchange Interest Rate Swap Futures
Introduction to Eris Exchange Interest Rate Swap Futures Overview Eris Exchange interest rate swap futures ( Eris contracts ) have been designed to replicate the net cash flows associated with plain-vanilla,
More informationProfit Model Details Explained
Profit Model Details Explained Using the Details link while in the profitability model, you generate a spreadsheet with sections described in the example below. The sample loan used is a $40,000, 4.25%
More informationThe Bank of Nova Scotia -- Response
ARRC CONSULTATION REGARDING MORE ROBUST LIBOR FALLBACK CONTRACT LANGUAGE FOR NEW ORIGINATIONS OF LIBOR SYNDICATED BUSINESS LOANS The Bank of Nova Scotia -- Response Question 1. If the ARRC were to adopt
More informationINVESTOR PRESENTATION
INVESTOR PRESENTATION 1st Quarter 2019 NASDAQ: INTL Disclaimer This presentation contains forward-looking statements within the meaning of "forward-looking statements" within the meaning of Section 27A
More informationBond Basics June 2006
Yield Curve Basics The yield curve, a graph that depicts the relationship between bond yields and maturities, is an important tool in fixed-income investing. Investors use the yield curve as a reference
More informationSWAPS. Types and Valuation SWAPS
SWAPS Types and Valuation SWAPS Definition A swap is a contract between two parties to deliver one sum of money against another sum of money at periodic intervals. Obviously, the sums exchanged should
More informationLoan Pricing Deals & Relationships Session 1. Agenda
Loan Pricing Deals & Relationships Session 1 Thomas Farin President Farin & Associates, Inc tfarin@farin.com 1 Agenda Session 1 Inputs What We Need to Know Role of Benchmarks Four Models to Look at Profitability
More information