A floating charge is a type of security interest in property that allows the charge to “float” or move with the property as it changes hands. The most common type of floating charge is a security interest in inventory, which allows the lender to perfect their interest by taking control of the inventory if the … Read more
Conduit financing is a type of financing in which a company raises money by issuing bonds or other debt instruments through an intermediary, typically a bank or other financial institution. The intermediary then uses the funds to make loans to other companies or investors. Conduit financing can be a cost-effective way for companies to raise … Read more
A cash management bill, or CMB, is a short-term debt instrument issued by the government of India. The maturity of a CMB ranges from 15 to 45 days. CMBs are issued at a discount to face value and are redeemable at par. The interest rate on a CMB is reset every week through a reverse … Read more
A bond anticipation note (BAN) is a type of short-term debt instrument that is typically issued by municipalities in the United States in order to finance capital projects. BANs are typically issued with maturities of one year or less, and are often used to finance projects that will be repaid from the proceeds of future … Read more
Market discount is the interest rate paid by a security that is trading at a discount to its par value. The market discount is the difference between the security’s par value and its current market price, divided by the number of years to maturity. For example, a $1,000 bond with a 5% market discount that … Read more
Eurocommercial paper is a type of short-term debt instrument that is typically used by large corporations to raise capital. Eurocommercial paper is issued in a variety of currencies, but the most common is the euro. Eurocommercial paper is typically issued with maturities of one to three months and is often used to finance short-term working … Read more
A “two name paper” is a security that has two counter-parties who are responsible for its payment. The most common type of two name paper is a corporate bond, which is a loan that a company takes out from investors. The company is the borrower, and the investors are the lenders. Other types of two … Read more
Ex-coupon refers to a period of time during which a bond or other fixed-income security does not have a coupon attached. The security is said to be “ex-coupon” during this time. Coupons are the periodic interest payments made by the issuer of a bond or other security. They are typically attached to the security at … Read more
An unsecured note is a type of debt instrument that is not backed by any collateral. This means that the issuer is relying solely on the creditworthiness of the borrower to make payments. Unsecured notes are often issued by corporations and are typically used to raise capital for expansion or other purposes. Because they are … Read more
The compound accreted value (CAV) of a bond is the sum of the periodic interest payments made on the bond, plus the principal amount of the bond. The CAV is used to determine the value of a bond at maturity. Where does accretion occur? In general, accretion occurs when money is added to an account … Read more
