Fixed Income and Debt

Fixed Income Analysis - Part 6 (2023)


Most global capital market instruments are some form of tradable debt security (“bond”). The term “fixed income” is often used to refer to the whole bond market since the vast majority of these securities (although not all) have regular, fixed, interest payments (“coupons”). Bond valuation requires methods of calculating and comparing the current values of multiple potential future cash flows.

Module 1 introduces the basic concept of the inverse price/yield relationship and explains how prices and yields are calculated for simple “bullet” bonds.

Module 2 looks at the ratings attached to high yield debt, the key structures used, and the primary and secondary markets for these assets.

Module 3 looks at the main features of FRNs, such as the reset formula and reset spread; examines how FRN coupons are determined; shows how the discount margin on FRNs is calculated; and discusses the price sensitivity of FRNs.


On completion of this course, you will be able to:
- Recognise the significance of the inverse price/yield relationship
- Calculate yields on bullet bonds
- Identify how coupon frequencies and day count fractions affect bond calculations
- Recognise the difference between clean and dirty bond prices
- Recall how bond transactions are settled
- Recognise how high yield debt is graded by the main ratings agencies and recall how the market for high yield assets developed
- Identify the key structures and features of high yield debt
- List the key participants in the primary and second markets for high yield debt
- Recall the historical development of the FRN market
- Recognise the key features of FRNs such as benchmark indices, reset formulas, reset margins, and discount margins
- Identify the interest rate sensitivities of set-in-arrears and set-in-advance FRNs


Module 1: Fixed Income Analysis - An Introduction
Topic 1: Overview of Bonds
Topic 2: Bond Value Prices
Topic 3: Yield
Topic 4: Day Count Conventions
Topic 5: Compounding Frequencies
Topic 6: Settlement

Module 2: High Yield Debt
Topic 1: Features of High Yield Debt
Topic 2: High Yield Debt Structures
Topic 3: Markets & Market Players

Module 3: FRNs - An Introduction
Topic 1: Overview of FRNS
Topic 2: FRN Features
Topic 3: FRN Sensitivities


Relevant Subject
Type 1 - Dealing in securities
Type 4 - Advising on securities
SFC:2.50, PWMA:2.50
Staff of Corporate Member: HK$800
All Member: HK$800
Non-Member: HK$1200