Bond Finance and Derivatives
This intensive 1 day course will demonstrate how and why good treasury practices can be cost-effective and can improve corporate treasury efficiency.
Specifically, we will look at debt finance, both bank and bonds, and concentrate on the management of interest rate risk, the products and hedging methodology.
Derivatives are risk management tools. We will look at the various derivative instruments, how they are used to hedge interest rate risk.
What will I get out of it?
A clear understanding of how and why a Corporate Treasury exists, and why the formulation and application of a Treasury Policy is essential.
An understanding of interest rates both short and long term, and the interplay between floating (bank loan) and fixed (bond) products.
An overview of Yield Curves, the rationale and practical examples.
A clear understanding of the impact that currency and interest rate movements can have on a company.
A practical introduction to the major risk management instruments and techniques.
How derivatives and why derivatives are used to effectively manage risk.
How to evaluate, monitor and control risks, and formulate an appropriate hedging policy
This programme will be conducted along workshop principles, with formal lectures, Case Studies & interactive worked examples. Each learning point will be reinforced with practical exercises.
Global Financial Markets and Treasury Overview
Defining our terms – capital market inter-relationships
o Money Markets
o Medium Term /Syndicated Finance
o Bond Markets/Equity
o FX and Derivatives
How finance is raised on the Global Markets?
Corporate Treasury Activities
A practical view of the various activities within a Treasury department
The need for a Policy and Procedures Manual
Ways and means of funding the business
Bank lending, syndicated debt finance, bonds and fixed income
Fixed Income (Bond) Markets
Money Markets – Short term borrowing
Base Rate vs LIBOR
Bonds – long term finance
Government vs Corporate issues, Corporate Bond spreads
Bond structures, fixed, floating and hybrids
Bonds and derivatives
The Price/Yield Relationship
Credit Ratings and the Ratings Agencies
Structured Finance/Securitisation (ABS, MBS, ABCP)
The Bond Issuing Process- the primary market
Public offer or Private Placements
A focus on the roles of the Issuer, Investor and Intermediary
Yield Curves - The term Structure of Interest Rates
Benchmark Yield Curves
Models of the Yield Curve: Positive/Negative/Flat/Inverse/Segmented
Rationale for shapes
Examples and applications for both corporate issuers and investors
First principles of hedging and the tools
Should we be using derivatives?
Exchange traded/OTC markets
Definition and key features of:
o Futures/forwards – short term interest rate futures (STIRS)
o Forward Rate Agreements (FRA’s)
o Options – IRO’s, caps, collars and floors
o Credit Derivatives
The importance of documentation- ISDA
Interest Rate and Currency Swaps
The range of swaps
o Vanilla IRS, fixed/floating
o Basis swaps
o Currency Swaps
Case studies – Interest Rate Swaps in practice
As every course we run is tailored to meet the specific needs of each client, we can only provide an estimate after fully understanding your specific requirements. Please complete the form below of call +44 (0) 208 894 4977 to discuss how Taylor Associates can help you.