The bond market refers to people and entities involved in buying and selling of bonds and the quantity and prices of those transactions over time. Participants in the market trade bonds issued by corporations and various government bodies. Dutch East India Company bond, issued in 1623. ... A corporation is a legal entity (distinct from a natural person) that often has similar rights in law to those of a Civil law systems may refer to corporations as moral persons; they may also go by the name AS (anonymous society) or something similar, depending on language (see below). ...
Because of the relationship between bond prices and interest rates, references to the "bond market" are often used to indicate changes in interest rates or the shape of the yield curve. Other names for the bond market are the credit market and the debt market. An interest rate is the rental price of money. ... The US dollar yield curve as at 9th February 2005. ...
Credit ratings are vital to the credit industry because they offer consistent and publicly available credit scores, produced by independent agencies, for either the creditworthiness of a major entity or for a particular debt security or other financial obligation.
Credit risk exposure measurement is especially important for lenders that extend lines of credit, as opposed to outright loans, and also to banks with portfolios of derivatives that have ever-changing and volatile credit exposures.
The first credit derivatives were traded in the early 1990s, but it is only in the last couple of years that their appeal has expanded from a few leading banks, dealing among themselves, to encompass broader sections of the financial markets and a wider range of uses.
Credit rating agencies play a critically important role in the efficient functioning of the fixed income markets by providing an independent source of information on the credit standing of corporate and other issuers of debt securities.
Issuer credit, however, innately cannot be measured with precision, because many of the factors that relate to issuer or counterparty credit, including the capability and experience of management, the quality of risk controls, and the ability to adapt quickly to changing market demands, among others, require a significant degree of subjective assessment.
Because ratings provide a reasoned and categorical assessment of the relative creditworthiness of credit instruments and issuers, it is appropriate that SEC rules incorporate references to ratings as benchmarks in the context of specific regulations, such as the broker-dealer net capital rules, that are sensitive to the relative safety of different investments.
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