AAA Rated: Unscrambling the Bond Market

Disclaimer

BRASS Program, ALA Annual Conference, July 8, 1996


Presentation Overheads

by
Louise Klusek
Salomon Brothers


Introduction | Bond Directories | Bond Statistics | Associations | Magazines
Credit Ratings | Company Credit News | Ratings Upgrades/Downgrades
Bond Defaults | Credit Analysis | Municipal Bonds



INTRODUCTION

What is a Bond?

  • Bondholders are creditors.
  • The borrower pays at regular intervals to the lender.
  • Bondholders have first claim in bankruptcy.

Who Issues Bonds?

  • Corporations
  • Federal Government
  • Federal Government Agencies
  • Municipal Governments and Agencies
  • Foreign Governments and Corporations

Who Invests in the Bond Market?

  • Private Investors
  • Institutional Investors
    • Money Managers
    • Pension Funds
    • Banks
    • Insurance Companies

Common Bond Types

  • Floating Rate Bonds
  • Zero-Coupon Bonds
  • Convertible Bonds
  • High-Yield Bonds
  • Asset-Backed Bonds

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BOND DIRECTORIES

Moody's Manuals

  • Bank and Finance, Transportation, Public Utility, Industrial, OTC Industrial, OTC Unlisted and International companies are all covered in separate annual volumes.
  • A full description of the company and a corporate history are included.
  • A capital history section in each company profile lists details (including issue date and underwriter) for many of the outstanding stock and bond issues of the company.

CUSIP Directory

  • CUSIP numbers identify every actively traded security in the U.S. and Canada.
  • CUSIP numbers are published for the CUSIP Service Bureau by Standard & Poor's.
  • Six digit CUSIPs identify issuers; numbers are expanded to nine digits for individual issues.

ISMA Manual

  • A comprehensive directory of Eurobond issues is published by the International Securities Market Association.
  • Bonds are listed by country and by type: straight, floating rate, convertible, medium term notes, and domestic.

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BOND STATISTICS

Bond Buyer Yearbook

  • Annual recap of the year in the bond markets with additional historical tables.
  • Best source for Municipal bond finance data with lists by state, by redemption, defaults, largest issues, etc.
  • Issue and underwriter rankings include those by market sectors: utilities, industrial development, taxable issues, housing, transportation, etc.
  • Also includes data on bond investors, interest rates and futures indexes.

Securities Industry Factbook

  • Annual guide to U.S. and global capital markets and the brokerage industry published by the Securities Industry Association.
  • Look here for historical data on the value and number of debt offerings and the amount of debt outstanding.
  • For supplemental news and data use the SIA newsletters: Securities Industry Trends and Foreign Activity.

Chase Investment Performance Digest

  • Includes performance statistics for fixed income markets and statistics.

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ASSOCIATIONS

Securities Industry Association

  • Represents bankers, brokers, dealers, and fund managers of all types working in the securities industry.
  • Publishes Securities Industry Trends and the Foreign Activity Report.

Public Securities Association

  • Traditionally represented bankers and dealers of government and mortgage-backer securities. Now represents banks and securities houses that underwrite, trade, or sell debt issues.
  • Newsletters and research reports are available at their Web site: http:/ /www.psa.com/. The site includes a strong legislative update page.

Government Finance Officers Association

  • Issues reports and position statements on public finance management and audit issues.
  • Publishes the Government Finance Review.

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MAGAZINES

BondWeek

  • News for bond market professionals. Covers the economy, strategies, personnel and new issues.
  • Regular departments include the Bond Market Barometer which measures bond indices, the Financing Record which lists new issues of the week, and the Rating Game which lists ratings changes.

Journal of Fixed Income

  • For academic research on the bond markets. This journal is published by Institutional Investor.

IFR International Financing Review

  • For comprehensive coverage of the Eurobond and international bond markets.
  • New issues are given a full description with market color.
  • Sections cover the U.S. dollar market. bonds, loans. emerging market debt. equities and derivatives.

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CREDIT RATINGS

Standard and Poor's Ratings Handbook

  • Credit ratings for all issues rated by S&P are listed in the Ratings Handbook. The current rating, rating date and former rating are given.
  • Corporate, structured finance, sovereign and international issues are listed in alphabetical order with their CUSIP numbers.
  • Each monthly issue begins with "CreditWatch" highlights.

Moody's Bond Record

  • This monthly guide lists all issues rated by Moody's: corporates, convertibles, government, and municipals.
  • Start with the Table of Contents because issues are arranged in lists by type of issue.
  • For each corporate issue, Moody's rating, the interest dates, the bond issue date, call dates, and the amount outstanding are given. For traded issues, prices are indicated.
  • Moody's Global Ratings provides ratings lists for international issues.
  • The Annual Bond Record is a guide to the entire year's rating activity with lists of redeemed and matured issues.

Fitch Ratings

  • A monthly guide to all Fitch ratings: corporates, municipal preferred stock, mortgage and asset-backed securities.
  • Current ratings announcements are also available through Fitch Financial Wire ( http://www.fitchinv.com/)

Ratings Guide. Duff & Phelps

  • Guide to all Duff & Phelps ratings, both U.S. and international.
  • Ratings Watch list is included in each monthly issue.

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COMPANY CREDIT NEWS

Standard and Poor's Creditweek

  • Use Creditweek for company rating analyses. Rating updates and lists of issues on "CreditWatch" are also included.
  • Periodic "Credit Reviews" profile selected industries and their issuers.
  • An index of rated companies is included at the back of each issue.
  • A quarterly "Market Review" provides in-depth analysis of bond issuance and includes a chronological list of new issues.

Moody's Credit Perspectives

  • Use the Credit Perspectives (formerly Moody's Bond Survey) for Moody's commentary on new ratings or ratings changes.
  • Corporate issuers, public finance offerings and international companies are covered.
  • All commentary refers to the date of the press release which is available on Bloomberg and other wire services.
  • Quarterly supplements list upgrades and downgrades, and provide data on total bonds outstanding by rating and sector.

Credit Decisions. Duff & Phelps

  • Weekly reviews of rated companies and the Rating Watch. Rated companies are given a full analysis with key fundamentals.
  • News and feature articles on bond market trends.

Fitch Insights

  • Weekly guide to all Fitch rating actions plus the FitchAlert. Separate editions cover corporates and municipals.
  • Leads off with a Viewpoint article, then follows with issuer analyses.

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RATINGS UPGRADES/DOWNGRADES

Standard & Poor's Creditweek

  • The "Ratings Roundup", issued each Februarv. lists issuers, ratings changes, and date of change.

Moody's Credit Perspectives

  • Each quarter, a supplement includes a list of upgrades and downgrades by issuer. Both U.S. and international issuers are included.

Annual Bond Record. Moody's

  • Issued each January for the previous calendar year. Separate lists cover upgrades, downgrades, and ratings withdrawn.
  • Corporates, municipals and municipal letters-of-credit are all included.

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BOND DEFAULTS

Moody's Investors Service

  • Corporate Bond Defaults and Default Rates 1938-1995 is the latest annual report issued each January as part of the Corporate Credit Reports series.
  • All corporate bond defaults are listed and described. A chronology of each company reorganization is included.
  • An overview and analysis of the year's default rates is included.

Public Securities Association

  • The PSA issues periodic reports on municipal bond defaults. Use their Web site at http://www.psa.com/

Standard & Poor's Corporation

  • A Special Report, published each May in Creditweek, analyzes corporate default rates and rating patterns.
  • S&P also issues default studies on sovereign issuers.

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CREDIT ANALYSIS

Standard and Poor's Global Sector Review

  • Surveys the credit quality of industry sectors in five volumes covering industrials, utilities, transportation, and consumer products and services. Includes the ratings rationale for all companies in the sector.
  • Issued in five volumes from July through December.
  • Year-end ratios and statistics for all sectors are given in the final (December) volume, CreditStats.

Corporate Credit Reports. Moody's

  • In-depth reports on companies and industries. Also special topical reports on U.S. and global fixed income trends.
  • Industry coverage in several series: Insurance, Industrials, Utilities, Banks and Sovereigns.

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MUNICIPAL BONDS

The Municipal Resource Center

  • RR Donnelley sponsors this Web site at http://www.municipal.com/
  • The Municipal Securities Disclosure Archive includes 1994 and 1995 Official Statements. Annual Financial Information will be added this year.
  • An issuers page includes links to state and municipal government Web sites. Demographic and marketing data is available.

The Blue List

  • This daily list of new corporate and municipal offerings is published by Standard & Poor's.
  • Bonds are described with CUSIP and ratings.
  • The Blue List on the Web ( http://www.bluelist.com/) is searchable by security type and state.

The Bond Buyer

  • The Bond Buyer is the newspaper of record for the municipal bond markets. Also covers news of corporate bonds, the mortgage-backed and treasury markets.
  • Includes an extensive statistical section.

Creditweek Municipal

  • A weekly guide to Standard & Poor's rated municipal issues. Includes articles on industry trends
  • Features S&P/DRI regional forecasts.

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bulletAAA Rated: Unscrambling the Bond Market
BRASS Program, ALA Annual Conference, July 8, 1996

Disclaimer: This publication has been placed on the web for the convenience of BRASS members. Information and links will not be updated. Posted 8 April 1997.