Page 40 - FINAL CFA SLIDES DECEMBER 2018 DAY 14
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LOS 51.d: Describe secondary markets Session Unit 14:
51. Fixed income markets: issuance, trading and funding
for bonds. p.22
Secondary markets refer to the trading of previously issued bonds. While some government bonds
and corporate bonds are traded on exchanges, the great majority of bond trading in the secondary
market is made in the dealer, or over-the-counter, market. Just as in the case of equities, we have
dealers, bid-ask spreads, clearing system.
LOS 51.e: Describe securities issued by sovereign governments., p.23
National governments issue sovereign bonds; if issued in the currency of the issuing government.
tanties
It carries high credit ratings and essentially free of default risk due to the governments ability to
collect taxes and print the currency to repay! Sovereign governments issue fixed-rate, floating-
rate, and inflation-indexed bonds.
LOS 51.f: Describe securities issued by non-sovereign governments, quasi-government entities,
and supranational agencies., p.23
• Non-sovereign government bonds are issued by states, provinces or say, counties.
• Agency or quasi-government bonds are issued by entities created by national governments for
specific purposes such as financing small businesses or providing mortgage financing.
• Supranational bonds are issued by supranational agencies, also known as multilateral agencies.
