05 Credit Sights How the Markets Work: Key Players & Primary vs Secondary

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30 Terms

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Investment Bankers (Coverage)

Advise on capital markets access, M&A.

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Capital Markets & Syndicate Teams

Advise on market conditions, structure new bond deals, and liaise with buy-side investors.

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Corporate Bankers

Manage direct loans to large corporates.

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Risk Management

Approves and monitors loan exposures.

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Debt Capital Markets (DCM)

Focus on investment grade bonds.

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Leveraged Finance (Lev Fin)

Focus on high-yield bonds.

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Syndicate

Interacts with buy-side to price and allocate new bonds.

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Sales

Manages client relationships and facilitates trades.

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Traders

Take trading risk and execute buy/sell orders.

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Desk Analysts

Support trading with bond-specific analysis.

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Publishing Research

Analysts cover equity, credit, macro, FX, etc.

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Wealth Management & Private Bank

Serve retail to ultra-high-net-worth clients.

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Asset Management Arms

Operate similarly to buy-side firms.

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Buy-Side

Includes insurance companies, pension funds, hedge funds, asset managers, corporates, and government entities.

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Life Insurers

Long-only investors; buy and hold long-dated bonds.

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Asset Managers

Invest client money, often in separately managed accounts (SMAs).

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Hedge Funds

Flexible strategies including long/short, event-driven, distressed, macro, etc.

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Pension Funds

Manage assets for future retiree payouts.

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Government Entities

Invest public funds in safe, short-term bonds.

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Corporates

Can both borrow and invest; often manage large cash reserves in-house.

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Chief Investment Officer (CIO)

Oversees strategy, allocation, fundraising.

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Portfolio Managers (PMs)

Run investment strategies by asset class.

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Traders

Execute trades and relay market intel.

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Research Analysts

Generate investment ideas, assess risk, know sectors.

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Sales/Product/Investor Relations

Ensure capital inflow and communication.

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Primary Market

  • Companies issue new bonds via banks.

  • DCM and syndicate coordinate pricing and allocation.

  • Investors place orders and confirm pricing before issuance.

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Secondary Market

  • Investors trade previously issued bonds.

  • Broker-dealers facilitate trades for a spread/fee.

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Which team within the sell side is responsible for advising on market conditions and working with end investors?

  • Corporate bankers

  • Syndicate team

  • M&A advisory

  • Risk Management

  • Syndicate team

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What is the primary role of the Chief Investment Officer (CIO) on the buy side?

  • Executing trades and providing market color

  • Generating ideas and managing positions in a portfolio

  • Facilitating buying of bonds in the primary market

  • Fund performance management and allocations

  • Fund performance management and allocations

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Which factors are part of Fitch's four-step analytical framework for ratings?

  • Purpose

  • Payback

  • Market Demand

  • Structure

  • Purpose

  • Payback

  • Structure