Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
Showing 16 terms
A tradeable loan on which the issuer pays a fixed coupon for a defined term and returns the face value at maturity.
Because the coupon is fixed, the price is what has to move to keep the bond competitive with what new borrowers are paying. That seesaw is why debt funds bought for safety can lose money in a rate-hiking cycle.
The return a bond delivers at its current price, and the market’s reference rate.
Rising yields hurt expensive growth stocks most, because distant profits are discounted harder.
A perpetual, loss-absorbing bond issued by a bank as part of its regulatory capital, ranking just above equity.
Sold on the yield and owned for the yield; designed to be written down in a crisis so that depositors are not. If it pays materially more than a bank deposit, that gap is precisely what it is paying for.
A government bond denominated in grams of gold, paying interest on top.
The only form of gold that pays you 2.5% a year. The cost is an eight-year term and a thin secondary market.
The fixed periodic interest a bond pays, expressed as a percentage of its face value.
Not your return. Buy above face value and the premium is a loss spread across the holding period, which yield to maturity captures and the coupon does not.
A mutual fund investing in bonds and other fixed-income instruments.
Not an FD with better returns. It carries credit risk and duration risk, which behave completely differently.
A bond portfolio’s sensitivity to changes in interest rates.
Longer duration means bigger swings — but those losses reverse with time, unlike credit losses.
Borrowing raised from overseas lenders or bond buyers in foreign currency, within the framework the Reserve Bank prescribes for who may borrow, from whom, for how long and at what all-in cost.
The headline coupon is not the cost. The cost is the coupon plus the hedge — and where it is unhedged, the cost is unknown until the rupee has moved.
A government security — a bond issued by the central government, carrying effectively no credit risk and the full interest-rate risk of its maturity.
Sovereign does not mean the price cannot fall. A long-duration gilt fund can post a real loss through a rate-hiking cycle while every borrower repays in full.
Reading equities in the context of bonds, currencies, commodities and volatility.
Rates and the rupee are the tide. Studying one boat will not reveal it.
Non-Convertible Debenture — a tradeable corporate bond sold to the public.
Best case a few percent extra; worst case the principal. The rating is the most informative line.
The return a bond portfolio would deliver if every holding were held to maturity.
A noticeably higher YTM means weaker credit, not a better manager.
A traditional life policy combining modest cover with a low, largely guaranteed return.
A poor bond with a little cover attached. Returns land near 4–5%, which inflation removes.
Government borrowing as a share of GDP.
A wider deficit means more government borrowing, which pushes up bond yields and competes with private borrowers for the same money. It reaches share prices through the cost of capital.
A side pocket created on a credit event, carving the affected security into separate units issued to everyone holding on that day.
It exists so that whoever redeems first cannot exit at a NAV still valuing a bond nobody can sell, leaving the loss with whoever stayed. Any later recovery is paid to the segregated units.
Closing a mutual fund scheme: redemptions stop and the portfolio is sold down, with cash returned in instalments as it is realised.
Not the same as the money being lost. In a liquidity failure the bonds are sound and cannot be sold this week; in a credit failure the borrower cannot pay at all. On the day, both look like a blocked redemption.