Bond / fixed income jargon

Thought i would post a running bond jargon list I have. Aggregated from various sources. May be helpful to newcomers. Let me know if I got anything wrong!

  • Par - Par Value is the amount returned to the bond investor by the issuer upon maturity. Par can also be referred to as notional, quantity, face. In terms of price par = 100
  • Handle - refers to the bond price to the left of the decimal point / fraction. 96-9 . Handle = 96. Also referred to as the big figure / big fig
  • Smooth - par value that is a round number. 25MM smooth = 25,000,000. As opposed to 25,500,000
  • Level - level is the price of the bond
  • Oddie/odd lot - trade that has quantity lower than normally traded amount. Typically less than 500k face for us at jpm
  • Baby bond - bonds less than 1k face. 
  • AON - all or none. Term used when bidding a list of bonds where the bidder buys all of the bonds or none
  • BWIC - bids wanted in competition
  • OWIC - offers wanted in competion
  • Comp/in comp - bonds bid in competition with other dealers.
  • Cover - second place highest bid in a sale
  • IO - interest only - bond that pays only interest and not principal payments.
  • Plain vanilla - Most basic type of CMO, in which all tranches receive regular interest payments, but principal payments are directed initially only to the first tranche until it is completely retired. Once the first tranche is retired, the principal payments are applied to the second tranche until it is fully retired
  • As of/AO/ booking as of - booking a trade retroactively after original trade date 
  • Basis point/bip/bps- A basis point is a hundredth of a percentage point
  • Real money/ real money guys - institutional clients that have the cash ready to buy securities without the need for borrowing or leverage. Big pension funds or insurance companies
  • Fast money - investors with shorter time horizons that often use leverage. Hedge funds for example
  • Machine/done on the machine - refers to a trade done on an electronic trading platform. Bloomberg/ tradeweb/ marketaxess
  • Traded away- trade was executed but with another broker/dealer
  • Tick Pricing - Mortgage bonds are quoted in increments of one thirty-second (1/32) of one percent. That means that prices will be quoted as, for instance, 99-30/32 - "99 and 30 ticks" meaning 99 and 30/32 of the face
  • + (plus) - equals 16/32. 100-9+ = 100-9.5
  • Play through - A dealer removes themselves from competition completely and advises the client to look else ware for order
  •  Factor - Monthly decimal value that represents the proportion of the original amount outstanding at a given time. At origination the factor of pool equals 1.00. As coupons are paid bond gets “factored down”
  • Sub Primes - loan pools that are considered inferior in credit rating due to characteristics of the borrowers ie fico score 
  • Specs/ spec pools / specified pools- mtg pools for which buyers know exactly which pools they are buying and their relevant characteristics- trade at a premium to TBA securities due to this certainty. Pools with specific desirable characteristics, such as low average loan balances, which are eligible for TBA trading may also be traded in specified pool markets if they can be sold at a premium to the prevailing TBA market prices. Basically specs are priced off of the strike price of a comparable tba then the premium paid is referred to as the pay up. Strike + pay up = all in price 
  • REMIC - A Real Estate Mortgage Investment Conduit is a type of owner trust based on a tax election allowing the creation of a MBS more complicated than passing-through the underlying cashflows (pass-through structure) or stripping off the principal and interest. REMIC law was passed as part of the Tax Reform Act of 1986 and marked the beginning of the growth of the CMO market. Virtually all CMOs are REMICS, and often the terms CMO and REMIC are used interchangeably, although that is not technically correct. Without REMIC law, a CMO would have to either register as a Registered Investment Company or be treated as a tax-paying corporation on the arbitrage (profit from the difference between the price received from selling CMOs and the cost of collateral).
  • Over subscribed - When the total investor orders are greater than the offered size of the bond issue in a syndicated deal aka new issue.
  • CPR - constant prepayment rate - repayment model that assumes an annual constant mortgage prepayment rate each month relative to the then outstanding principal balance of a pool of mortgages for the life of that pool. For example, at 6% CPR, the CPR model assumes that the monthly prepayment rate will be constant at 6% per annum. 
  • Cash settlement/ cash trade/ T+0- same day settlement. Trade date is same as settle date 
  • Reg settle - follows regular settlement schedule
  • Skip settle - doesn’t follow conventional settlement schedule. Example abs bond done for t plus 3 not t plus 2 
  • Jumbos - mortgages that are larger than the gse conforming limit. Also known as whole loans. A jumbo pool is a pass-through Gnma mortgage-backed security (MBS) that is collateralized by multiple-issuer pools. These pools combine mortgage loans with similar characteristics and are more massive than single-issuer pools. The mortgages contained in jumbo pools are more diverse on a geographical basis than are those in single-issuer pools.
  • CLOCollateralized Loan Obligations
  • CMBS – Collateralized Mortgage Backed Securities
  • CMO – Collateralized Mortgage Obligations
  • ABS - asset backed security
  • Collateralised debt obligation, (CDO): A CDO is a type of bond. The issuer is normally a special purpose vehicle, (SPV). The SPV contains assets that back the interest and principal repayment of the CDO. The assets can be other bonds, loans, credit derivatives or receivables eg credit card payments.
  • Collaterised loan obligation, (CLO): A type of collaterised debt obligation that uses loans as the assets in the special purpose vehicle
  • ABS - An asset-backed securityis a type of financial investment that is collateralized by an underlying pool of assets—usually ones that generate a cash flow from debt, such as loans, leases, credit card balances, or receivables. It takes the form of a bond or note, paying income at a fixed rate for a set amount of time, until maturity
  • CMBS -Commercial mortgage-backed securities are a type of mortgage-backed security backed by commercial and multifamily mortgages rather than residential real estate. CMBS tend to be more complex and volatile than residential mortgage-backed securities due to the unique nature of the underlying property assets 
  • CMBX - The CMBX index is a synthetic tradable index referencing a basket of 25 commercial mortgage-backed securities (CMBS). CMBX provides insight into the performance of the CMBS market.
  • Convexity- Measure of the sensitivity of the duration of a bond to changes in interest rates.
  • Commercial Paper/cp/paper/sheet/short term/ stfi/money markets- Commercial Paper securities are short term obligations with maturities ranging from 2 to 270 days, issued by banks, corporations, and other short-term borrowers. Such instruments are unsecured and usually sold at a discount. - no coupon, redeem at par 
  • Px = price 
  • Duration- The linear measure of how the price changes in response to interest rate changes.
  • Mortgage pass thru - A security representing a direct interest in a pool of mortgage loans. The pass-through issuer or servicer collects payments on the loans in the pool and "passes through" the principal and interest to the security holder on a pro rata basis. A bond backed by mortgages issued by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, and the Government National Mortgage Association.
  • Residual/ resid - In a REMIC, the residual is that tranche which collects any cash-flow from the collateral that remains after obligations to the other tranches have been met.
  • Round lot - unit of trading or a multiple of that unit. Typically $100,000 is the measure of a round lot of bonds.
  • TBA’s - The key dates for a TBA trade are the trade date, the notification date (48-hour day) and the settlement date. On the trade date, 6 criteria are agreed upon for the security or securities that are to be delivered: issuer, maturity, coupon, face value, price, and the settlement date. For example: Customer A agrees to buy, at an agreed price, from Bank B $100 million of Fannie Mae 30-year securities with a six percent coupon for delivery in two months. TBA trades normally settle according to a monthly schedule set by industry practice,2 two business days before the contractual settlement date of the trade, the seller will communicate to the buyer the exact details of the MBS pools that will be delivered (the 48-hour rule). Due to the required two days notice, the notification date is often called the 48-hour day. On the settlement date, the securities that were specified two days earlier are delivered and the buyer pays the seller.
  • DUS bonds / project loans / PL’s - Delegated Underwriting and Servicing (DUS) MBS is like no other security in the marketplace. Unlike a conduit execution, loans are securitized on a single-asset basis, providing creative structuring flexibility. Fannie Mae creates DUS MBS supported by loans on multifamily properties with a minimum of five units- Think large apartment complexes . names like “villas on the pier” DUS MBS offer Fannie Mae’s guaranty of timely payment of principal and interest. DUS Lenders can originate fixed-rate, adjustable-rate, fully-amortizing, and full- or part-term interest-only multifamily mortgage loans.
  • Dirty price/ dirty strike - price that includes accrued interest based on coupon rate 
  • Round Robin - any transaction resulting in equal and offsetting positions by one customer with two separate dealers for the purpose of eliminating a turnaround delivery obligation by the customer- tbas basically all done on tweb
  • RTTM - real time trade matching
  • CNS - continuous net settlement
  • TPMG - treasury market practice group
  • RAD - receive and delivery 
  • DWAC - deposit withdraw at custodian
  • DVP - delivery versus payment
  • FOP - free of payment
  • COD - cash on delivery 
  • COAC - corporate action - reorgs, splits, name change, tender offer, merger, spin off
  • TRACE - trace reporting and compliance engine
  • MSRB - municipal securities rule making board  
  • MMI - money market instrument. Only product that must go out in 50MM lots in DTC
  • QIB - qualified institutional buyer
  • KYC - know your customer
  • MFSTA - master securities forward transaction agreement - needed for tba trading as they are viewed as fwd contracts
  • IDSA - international swaps and derivatives association
  • EPN - electronic pool notification 
  • Stick - 1 million dollars
  • Speeds - prepayment speed on a mtg
  • Basis - Refers to the difference between the spot price of a financial asset and the price of the corresponding futures contract.
  • Alpha - measurement of a portfolio's risk adjusted return.   
  • Haircut: A term that is used in several different markets. It normally refers to a deposit of cash or collateral that is used to secure a transaction and thereby reduce the credit exposure for one of the parties.
  • 144a: A private placement issued under 144a allows Non-US companies to access sophisticated domestic US investors. A non US company does not have to comply with Sarbanes-Oxley legislation when issuing under 144a. Marketing of 144a deals to general investors is prohibited.
  • Reg-S: Reg-S is a Securities Exchange Commission filing used for Initial Public Offerings that are targeted at non US investors. Marketing to investors in the US is therefore prohibited
  • Yankee cd’s / yankees - A Yankee certificate of deposit (CD) is a type of CD that is issued in the United States by a branch of a foreign bank. Yankee CDs are denominated in U.S. dollars and are used by foreign banks to raise capital from U.S. investors. Settled thru our DTC 2773
  • Supras / supranational bonds- are defined as those issued by entities formed by two or more central governments to promote economic development for the member countries (the European Investment Bank and the Asian Development Bank)
  • Bullets/ bullet bonds - a debt investment whose entire principal value is paid in one lump sum on its maturity date, rather than amortized over its lifetime. Bullet bonds cannot be redeemed early by their issuer, which means they are non-callable.
  • Crossing/ Cross/ the bid/offer spread - hitting the bid / lifting the offer, thereby willing to immediately sell / buy at a lower / higher price than other market participants
  • Being put in the box - occurs when client / dealer refuses to do business with the other most likely due to a business reason
  • Bulge bracket - members of underwriting syndicate that issue largest number of securities in a new issue 
  • Ax/axed to buy sell-  a term for securities in which a market maker can provide aggressive pricing 

theprocess1455, bummer your thread hasn't had a response yet. Maybe one of these threads could point you in the right direction:

More suggestions...

I hope those threads give you a bit more insight.

I'm an AI bot trained on the most helpful WSO content across 17+ years.

Reprehenderit atque repellat ducimus temporibus. Cumque nobis sit et voluptate. Incidunt quaerat voluptas inventore delectus omnis ad in. At et amet architecto id voluptatem similique laboriosam. Repellat consequatur similique esse amet consequatur.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 04 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 11 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 06 97.7%
  • Lincoln International 04 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (82) $263
  • 3rd+ Year Analyst (12) $184
  • Intern/Summer Associate (32) $172
  • 2nd Year Analyst (62) $169
  • 1st Year Analyst (194) $159
  • Intern/Summer Analyst (142) $101
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”


redever's picture
BankonBanking's picture
Betsy Massar's picture
Betsy Massar
CompBanker's picture
dosk17's picture
GameTheory's picture
kanon's picture
Secyh62's picture
numi's picture
DrApeman's picture
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”