Structured Products I: Fixed-income Derivatives and Asset-backed Securities

2016 ◽  
Author(s):  
Urbi Garay
Keyword(s):  
Fixed Income ◽  
Structured Products ◽  
Fixed Income Derivatives ◽  
Asset Backed Securities

Derivatives Markets

2019 ◽  
pp. 151-166
Author(s):  
Halil Kiymaz ◽  
Koray D. Simsek
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Credit Derivatives ◽  
Forward Rate ◽  
Fixed Income ◽  
Over The Counter ◽  
Interest Rate Options ◽  
Interest Rate Derivatives ◽  
Fixed Income Derivatives ◽  
Derivatives Markets

Interest rate derivatives markets have enjoyed substantial growth since the late 1990s. This chapter discusses the development of these markets since 2000 and introduces the most popular interest rate derivative instruments. Although forward rate agreements and interest rate swaps are important examples of over-the-counter (OTC) products, futures on interest rates and bonds are innovations of organized exchanges. Both OTC interest rate options and exchange-traded options on interest rate futures are discussed to illustrate an overlapping area of both types of derivatives markets. Participants in debt markets are also exposed to both interest rate and credit risk. To mitigate the latter risk, the OTC fixed income derivatives markets provide credit default swaps (CDSs). As credit derivatives are also a subset of fixed income derivatives, CDSs are discussed further.

Collateralized Debt Obligations, Collateralized Bond Obligations, and Collateralized Loan Obligations

2019 ◽  
pp. 421-434
Author(s):  
Robert Eckrote ◽  
Christopher Milliken ◽  
Ehsan Nikbakht ◽  
Andrew C. Spieler
Keyword(s):  
Balance Sheet ◽  
Financial System ◽  
Bank Loans ◽  
High Yield ◽  
Fixed Income ◽  
Collateralized Debt Obligations ◽  
Income Security ◽  
Structured Products ◽  
Special Purpose Vehicle ◽  
Collateralized Debt

Collateralized debt obligations (CDOs) are structured products that are issued by a special purpose vehicle with the objective of improving the issuer’s balance sheet, increasing access to illiquid securities, and/or generating a higher yield than would be offered in a traditional fixed income security. This chapter provides an overview of CDOs including a discussion on the history, structure, uses, and impact on investors and the broader financial system. CDOs can be further classified by the type of security held as collateral, such as collateralized bond obligations (CBOs), which typically hold high yield debt, and collateralized loan obligations (CLOs), which hold bank loans. These financial structured products gain notoriety for their role in the financial crisis of 2007–2008 and have since declined in popularity. Despite the negative perception that CDOs carry, securitization continues to play an important function in the financial system and offers benefits to issuers and consumers as long as both parties use the end product responsibly.

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