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The following fictitious example securities have been created to explain the key differences between two of themost common types of index linked securities. Understanding these key difference...
By Elizabeth Moran
For investors new to fixed income, there are many factors to consider when choosing assets for your portfolio. While analysts focus on the credit worthiness of the is...
Fixed rate bonds provide direct exposure to interest rates. In a market where interest rates are declining, which usually occurs where there is low or negative growth and the RBA is easing rates...
The Australian Consumer Price Index (CPI) measures quarterly changes in the price of a 'basket' of goods and services which account for a high proportion of expenditure by the CPI population group-...
Amongst Treasurer Wayne Swann's announcement on banking reforms over the weekend is the prospect of the Government allowing financial institutions to use covered bonds as a source of funding....
Tier 1 capital refers to capital that must be held by banks to meet regulatory requirements and is a broad indicator of a bank's financial strength and ability to sustain potential future losses.
A wrapped bond is a security issued by a company and then insured by a third party, most commonly an insurance company, which provides a guarantee to the investors that if the underlying issuer fai...
In last week's Wire we defined derivatives as being financial instruments whose characteristics and pricing are derived from another underlying instrument.
In this article we examine one of...
A derivative is a financial instrument whose characteristics and pricing are derived from another underlying instrument. Derivatives are often used to help companies and individuals manage risk (he...
A bond's maturity gives little indication of how much of its return is paid out during its life or the timing and size of its cash flows. For example, a zero coupon bond h...
Property investors know and respect the mantra; location, location, location. Key in fixed income markets is where the product sits in the capital structure.
Where an investment sits in the...
What are bonds?
A bond is a security that pays a defined distribution (the coupon) for a given period of time (the term) and repays the face value of the security at matu...
When considering investing in any form of asset it is worth considering the risk versus reward continuum. Generally, lower risk investments provide lower returns. Australian Government bonds are co...
One of the key terms for Australian fixed income investors is the Bank Bill Swap Rate, or more commonly referred to as BBSW. While BBSW has many uses, for fixed income investors its main relevance...
Hybrids are a broad classification for a group of securities, used by a variety of Australian companies to raise money that combine both debt and equity character...
The distinction between retail and wholesale (including professional and sophisticated) clients has become more important from a disclosure perspective as a result of ASIC's Information Sheet 99.&n...
Do you understand the difference between a reset preference share and a step-up preference share?
Hybrid securities are complicated and investors keen to take advantage of current high retu...
The yield to maturity refers to how much a security will earn if it is held to its maturity date. It is the annualised return based on all coupon payments plus face value if you hold the security u...
The nominal yield is the return based on annual coupon payments as a percentage of the face value of the security. Also known as the coupon rate, this does not change throughout the life of the sec...
Liquidity is one factor that investors can overlook when constructing a portfolio. Yet at any point where the investor needs to access their funds it becomes the single most important feature of a...
In response to the recent financial turmoil, the international body of financial regulators, the Basel Committee on Banking Supervision has released new regulatory guidelines which member nations a...
Introduction
Investors must be aware of where investments rank in the capital structure of a company to ensure that they are earning appropriate returns for their investm...
An Australian Guide to Fixed Income
FIIG
