Glossary

fixed-rate short-term discount Treasury bills issued by the French debt agency Agence France Trésor (AFT).

is an independent organization which assesses the solvency risk of the issuer. Credit rating agency such as Moody’s and Standard & Poor use credit rating grades whom these latter might affect the interest rate applied to the security being issued.

is a financial security, used either to reduce refunding cost, to exploit arbitrage opportunities or to cover the credit risk. As the titrisation, CDOs are issued by “tranches” in order to sell to the investors some financials securities fitted to their need.

is an agreement between the buyer and the seller. The buyer makes a series of annual payment to the seller that in return would compensate the loss of asset occurred by a default of the security.

is a derivative which offers synthetic exposure on an CDS.

is the amount received by the bondholder at a regular interval. The period of payment depends on characteristic of bonds. It might be annual payment, semi annual, monthly…and even no payment are done until maturity (zero coupon bond).

the bondholder could be repaid in share and not only in cash.

There are three different kind of credit risk: -default risk: is the risk that issuers will fail to make interest or principal payment -credit spread risk: is the risk the spread between treasury bond and credit bond get widen. -Downgrade Risk: Price of bond might fall due on a downgrade of the credit rating of the bond.