Bonds - Fundamentals

After this course, you will understand the operating principles and organisation of the bond market having analysed:

• The source and development of fixed income securities
• The players and parties involved
• The new market organisation including the requirements of MIF 2 (MIFIR/MIFID 2)
• The basic characteristics of bonds (physical presentation, nominal value, issue price, redemption price…)
• The main explanatory variables encountered
• How to issue bonded debt (types of issue, mechanisms, prospectus and regulatory aspects …)
• The rights and obligations of the bond issuer and holder
• The risks involved in a bond investment and solvency criteria
• The basic elements and characteristics of the various types of bonds (fixed rate, variable rate, hybrids…)
• The principles and methods used to establish a FAIR bond price
• Problems encountered in measuring bond yields
• How to structure and interpret a bond rates curve and what conclusions to draw from it from a structural and economic point of view

• THE ORIGINS OF DEBT INSTRUMENTS
• BASIC ELEMENTS OF THE VARIOUS TYPES OF BONDS (ILLUSTRATION BY EXAMPLE)
  • Traditional products: fixed and variable rate bonds
  • Hybrid products: convertible and reverse convertible bonds, bonds with warrants, indexed bonds…
• IMPORTANCE OF SOLVENCY CRITERIA
  • Hierarchy of issuers
  • Notion of spread
  • Rating agencies
• FEATURES AND ASSESSMENT OF RISKS ASSOCIATED WITH BONDS
• RIGHTS AND OBLIGATIONS OF THE BOND ISSUER
• RIGHTS AND OBLIGATIONS OF THE BOND HOLDER
• BIRTH OF A BOND
  • Issue mechanism
  • Issue prospectus
  • Regulatory aspects
• BASIC CHARACTERISTICS OF THE PRODUCT AND ISSUE CONTRACT
• TYPES OF PLAYERS AND OTHER PARTIES INVOLVED IN THE BOND MARKET
• DESCRIPTION OF DISINTERMEDIATION, INTERNATIONAL DEVELOPMENT AND DEVELOPMENT IN THE BOND MARKET
• MIFIR AND MIFID I AND II IMPACT AND CONSTRAINTS IN TERMS OF MARKET ORGANISATION AND TRANSPARENCY
• PRINCIPLES OF BOND PRICING
• PRACTICAL ASPECTS OF AND PROBLEMS INVOLVED IN MEASURING A BOND YIELD
• THE BOND RATES CURVE: HOW IT WORKS AND INTRODUCTION TO ANALYSIS