I'm mainly familiar with equities, but really want to learn more about fixed income in general. Is there a book or guide that is good for this?
Thanks!
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Big Short, Liar’s Poker, and Flash Boys (All by Michael Lewis) are great reads. It will be very beneficial to understand inflation, interest rates, credit ratings and their relationship to the bond market(or issuing debt in general). I have some IB fixed income 101 packets I can send you as well. Shoot me a message when you get the chance if interested.
would you recommend the fabozzi book a good start as well?
I would. Fixed Income Analysis, in particular. I've only gotten about a third of the way through it, but it's a great technical guide that doesn't use super advanced math.
Hi, i would really appreciate if you could send me the IB fixed income 101 files, my email is simplyven at gmail dot com
1) fixed income is hard 2) start with the basics (US Treasuries) 3) after mastering US Treasuries (give us a call in 5-10 years), then go on to spread products, swaps, CDS, and options
Fabozzi & Tuckman (these are similar) The Treasury Bond Basis (teaches cash vs futures) Fixed Income Markets and Their Derivatives (college textbook)
It will take you a long time to understand everything in these books, especially if you don't have a knowledgeable person to explain things. look for youtube vidoes to help with topics that you find dificult. there are lots of good ones out there (swaps, futures, options, etc...)
You can get the BMC certification. There's a fee but it's worth it (for starters). It's a high-level overview.
when you do get familiar with fixed income, i know a lot of traders love anti ilmanen's set of notes on the yield curve. the guy used to do quant stuff at salomon Smith Barney, believe he's at AQR now. it's somewhere on this forum or you can google for it.
too many formulas in fixed income
I work in DCM in a hybrid trader/underwriting role and fixed income is hard as hell to learn in the beginning. Best book in this business for beginners is definitely Bodie Kane. Read up, understand bond dynamics, interest rate risk, duration, convexity, CPR, etc. and you should be fine. It'll take a while to get used too, as fixed income is more difficult than other product groups.
CFA study material (Schweiser or Institute material, latter is more detailed). Just look for the fixed income book online. Did a quick Google search and found a bunch under $10.
What about an industry overview, or a 101/102 post.. has there been an in depth one on WSO?
Work in FI and rates From a content perspective this book was quite helpful when i first started; Interest Rate Swaps and Their Derivatives: A Practitioner's Guide by Amir Sadr Great deal of useful practical information, also has a rundown of basic bond maths, what a yield curve is and risk metrics at the beginning (DV01, BPV) I would also recommend you start by understanding how the interbank funding market works before moving up the curve.
A few questions fixed income (Originally Posted: 07/01/2016)
Hi guys. I'm looking to get some general indication of answers to these questions. Would really appreciate help from anyone in the industry.
I've been out of the FI game for a while now, but in short: 1.) No. Benchmarking and media talking bobble heads 2.) Depends what you mean by "active management". We were constantly assessing price/yield moves, duration, credit risk, running sensitivities, etc. in addition to pumping brokers to try to find out who was doing what. I'm sure some guys set it and forget it, but I wouldn't advise it. 3.) Bloomberg terminal. If not, Interactive Brokers. For theory, Fabozzi cannot be beat.
Fixed Income Questions (Originally Posted: 07/22/2013)
Hey guys, first time user here.
I have a question that to me seems pretty noobish, and I feel like I should know this but for some reason I never came across this material. Just to add some background first, I am interning in banking right now and going into my Junior year in the Fall.
Having said that, I seem to know a good bit about banking and also the markets, but in terms of fixed income, I seem to be very behind. Do you think this is bad that I do not know much about this part of Finance right now at this stage in undergrad before recruiting?
1) I was wondering if you guys could help explain the differences between bonds: Muni, Treasury, High Yield, Investment Grade and also Senior, Mezzanine, Junk etc. Also besides the general terminology behind each one, I am having trouble figuring out when/how/why these are used and in what context. So lets say a company wants to raise debt, why would they issue municipal bonds over treasury notes or something of this nature?
2) Also, why would a company issue senior notes instead of high yield etc. When a company issues these notes, what role does the underwriter play in this and how does this affect them and their business? I never really understood what exactly happens to the bank that underwrites the debt for a company that needs to issue it. How does the underwriter make money, and is there a liability from doing this?
3) What does it mean for bonds to be "Asset backed" or "revenue backed'? So if the issuer defaults on this note, does the borrower obtain the asset that is backed behind these notes? Maybe someone could help clarify what exactly this means, where this asset is coming from, how it relates to our company at hand, and also along with #2, what role does the issuer play in an asset backed security? Are all bonds backed by something?
Sorry for all the questions. I tried to do a lot of research on this but before I dig into this topic more, I figured I need to know the basics first and I hope WSO can help me out a little bit. Do you guys think Fixed Income questions that root from some of the topics above come up in banking interviews, or is that more capital markets/lev fin/S&T-type interview stuff? Thanks guys
You could google a lot of this, so I'll only give a brief run down of what little I know.
1) Muni = municipal (i.e. city of nyc water) Treasury = US gov't (federal), lowest interest paying bonds (typically) due to their perceived safety/liquidity HY = bonds typically rated by CRAs (moodys, fitch, s&p) with lower than BBB (have higher spreads) Investment grade = high quality companies as determined by CRAs (not always trustworthy) and have tight spread to treasuries
2) Issue bonds according to seniority according to lender standards (may be off on this), and is in accordance/can be found (the terms) in the bond's covenant. Seniority means they get priority to assets in case of bankruptcy/restructuring/liquidation. And yes, make money on the spread.
3) You should know about ABS (with their cause of 08 and all), but are essentially a group of (e.g.) mortgages packaged together to pay out coupons from the diversified pool. ABS are backed by a specific pool (i.e. they are independent of the issuer's credit quality). Saying basically, if ford goes belly up, the ABS backed by some auto loans won't become worthless since it is already designated a pool of assets.
Read Fabozzi Fixed income book, should help out a little.
Hope that covers some of the basics
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