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2.1 Introduction

Global fixed-income markets represent the largest subset of financial markets in terms of number of issuances and market capitalization.

In 2010, global fixed-income markets were three times larger than global equity markets.

Understanding how fixed-income markets are structured and how they operate is important for debt issuers and investors.

  • Debt issuers have financing needs that must be met.

Funding needs may include:

  • Infrastructure projects (schools, roads, hospitals, etc.) for governments;
  • Business expansion for corporations, and
  • Liquidity and credit needs for financial institutions.

Lesson Wrap-Up

This lesson should leave you able to explain the introduction in a fixed-income context and connect it to the decisions made by issuers, investors, or analysts.

Review Prompts

  1. Explain introduction in your own words.
  2. State one exam-style risk, valuation, or market implication of the introduction.