Fixed income

Series EE Savings Bond A U.S. savings bond that earns interest, does not have a coupon, and is backed by the full faith of the federal government.

Series I Savings Bond A Series I Savings Bond is a Treasury-issued savings product with a return consisting of a fixed rate plus an inflation component. I-Bonds are non-transferable, carry a 30-year maturity, and offer tax-deferred growth.

Servicer Risk The risk that a mortgage or loan servicer fails to collect payments, properly manage delinquencies, or distribute cash to investors, disrupting securitization cash flows.

Shadow Rating An unpublished rating that rating agencies assign to unrated issuers in structured finance transactions.

Shelf Registration for Bonds An SEC filing process that allows issuers to pre-clear a large debt offering and tap capital markets opportunistically over time.

Single-Tranche CDO A custom CDO structure where a dealer sells only one tranche to a client and delta-hedges the residual risk itself, avoiding public offering.

Sinking Fund Provision in Bonds How a sinking fund requires bond issuers to retire portions of debt before maturity, reducing default risk but introducing prepayment risk.

Social Bond Fixed-income instruments whose proceeds finance social-outcome projects in healthcare, education, housing, and employment.

SOFR Explained: The Secured Overnight Financing Rate How the secured overnight financing rate works, why it replaced LIBOR, and its role in pricing short-term borrowing costs.

SOFR vs LIBOR: Why the Benchmark Rate Changed Why LIBOR was retired, how SOFR differs in construction and credit risk, and what the transition means for floating-rate bonds and derivatives.

Solicited vs. Unsolicited Rating The key differences between ratings sought by issuers and those assigned by agencies without issuer involvement.

Sovereign Bond Seniority in Default When a government defaults, creditor seniority determines who gets paid first. Learn how domestic law, foreign law, preferred creditors, and holdouts interact.

Sovereign Bond Yield Spreads in Emerging Markets Why emerging-market government bonds trade at a spread over US Treasuries—and what widens or tightens that gap.

Sovereign Ceiling Rule and Its Effect on Corporate Bond Ratings Why corporate bonds rarely receive ratings above their home country's credit rating, and the exceptions that test the rule.

Sovereign Credit Default Swap A derivative contract that transfers default risk on government debt, with CDS spreads often diverging from bond-implied yields during market stress.

Sovereign Credit Rating Factors: What Drives a Country's Grade Learn what factors determine sovereign credit rating—economic metrics, fiscal position, institutional strength, and external vulnerabilities used by ratings agencies.

Sovereign Wealth Fund Bond Investment How state-owned investment vehicles allocate capital to government bonds and the geopolitical dimensions of their yield-seeking behavior.

Sovereign Yield Curve The complete spectrum of interest rates paid by a government across all maturity periods, from short-term bills to long-term bonds.

Special Assessment Bond Municipal bonds repaid by levies on property owners who directly benefit from the funded improvement project.

Special Purpose Treasury Issuance Short-term debt instruments issued by the U.S. Treasury outside regular auctions to manage temporary cash needs.

Special Purpose Vehicle A legally separate bankruptcy-remote entity created to isolate securitized assets from an originator's insolvency.

Specials Repo How on-the-run securities command below-GC repo rates due to demand for specific collateral delivery.

Speculative Grade Credit ratings below BBB-/Baa3, including BB+/Ba1 through C/Ca, denoting elevated default risk and junk status.

Split Rating Bond: When Agencies Disagree What happens when two rating agencies assign different grades to the same bond, and how investors and indices handle the conflict.

Spot Rate The yield on a zero-coupon instrument for a specific maturity, used to discount individual cash flows.

Spot Yield Curve Dynamics How zero-coupon spot rates change across maturities and drive bond valuations and forward rates.

Spread Compression in Structured Credit How tightening credit spreads compress excess returns in ABS and CLO structures, weakening credit enhancement and forcing managers to adapt.

Spread Duration The sensitivity of a bond's price to a one-basis-point change in its credit spread relative to a risk-free benchmark.

Spread to Treasuries The yield difference between a bond and a comparable-maturity Treasury, measuring credit risk and liquidity premium.

Static vs Managed CLO: Key Differences Understand static vs managed CLOs: static vehicles hold fixed loan pools from closing, while managed CLOs allow active trading during reinvestment periods.

Step-Up Coupon Bond Bonds whose coupon rate increases on a predetermined schedule, often tied to credit-quality milestones or issuer events.

Step-Up Coupon Bond: How Rising Coupons Work Step-up coupon bonds increase their interest rate on preset dates or when ratings fall, compensating long-term holders for time and credit deterioration.

Stripped Securities Treasury bonds separated into individual coupon and principal payments, allowing investors to buy zero-coupon instruments.

STRIPS: Separate Trading of Registered Interest and Principal How Treasury STRIPS work: how coupon and principal are separated into zero-coupon instruments, uses, and tax implications for investors.

Structured Finance The practice of combining financial assets into securitized instruments sold to investors, creating new risk-return profiles from pools of underlying cash flows.

Student Loan ABS Mechanics How student loan ABS works: pooling federal and private student loans into securities, managing prepayment and default risk, and structuring cash flows.

Subordinated Bond A bond that ranks below senior debt in claim on a company's assets, compensated with higher yield for accepting lower recovery in default.

Subordination The mechanism by which junior tranches of a securitization absorb losses first, protecting senior tranches and enabling higher credit ratings.

Sukuk Islamic fixed-income certificates structured around asset ownership to comply with Shariah principles prohibiting interest.

Sustainability-Linked Bond Bonds whose coupon rate adjusts up or down based on whether the issuer meets predetermined ESG or environmental performance targets.

Swap Curve vs Treasury Curve: Key Differences Compares the interest-rate swap curve and Treasury curve: what they measure, why they diverge, and which curve professionals use as a benchmark.

Synthetic CDO Design Credit derivatives-based structured products versus cash CDOs; synthetic instruments that replicate credit exposure without owning the underlying bonds.

Synthetic Risk Transfer and Significant Risk Transfer Banks use synthetic securitization to move credit risk off-balance-sheet for capital relief; regulators require significant risk transfer to permit accounting relief.

Tail Risk in Structured Credit Products Tail risk in structured credit: learn why junior tranches absorb outsized losses during correlation shocks, and why AAA-rated seniors face hidden tail exposure.

Tax Anticipation Note A short-term municipal borrowing tool repaid from a specific forthcoming tax revenue stream, typically within a single fiscal year.

Tax Anticipation Notes Short-term municipal borrowings secured by expected future tax revenue, used to bridge seasonal or temporary cash-flow gaps.

Tax Increment Financing A municipal finance tool where a city borrows against future property-tax gains from a development zone to pay for that zone's infrastructure.

Tax-Equivalent Yield The pre-tax yield a taxable bond must offer to equal the after-tax return of a tax-exempt municipal bond, accounting for the investor's marginal tax rate.

Tax-Exempt Bond Municipal bonds exempt from federal and often state income tax, popular for tax-efficient income.

Taxable vs Tax-Exempt Money Market Funds When municipal money market funds beat taxable funds, the break-even tax bracket calculation, and yield comparison factors.

Term Funding Facility A central bank lending program that provides credit to banks and financial institutions at terms longer than overnight, typically weeks to months.

Term Premium in the Yield Curve Explained Term premium is the extra yield investors demand for holding long-duration bonds instead of short ones. Understand its components and why it shrinks.

The Issuer-Pays Model in Credit Rating Agencies Explained How and why rating agencies charge issuers rather than investors, the incentive conflicts this creates, and how the issuer-pays model differs from subscriber-pays alternatives.

The Market Discount Tax Trap in Municipal Bonds How buying a municipal bond below par in the secondary market converts tax-exempt coupon income into ordinary taxable gain at sale—a widespread but overlooked pitfall.

The Muni Bond Barbell Strategy How the municipal bond barbell strategy works, when to concentrate in short and long maturities instead of the middle.

The Reinvestment Assumption Inside Bond Duration Duration measures bond price sensitivity to rate changes, but embeds an implicit assumption: coupon payments are reinvested at the current yield. Violate it, and real returns diverge sharply.

Through-the-Cycle Rating A credit rating methodology that averages an issuer's creditworthiness over a full economic cycle, reducing volatility.

TIPS Deflation Floor Explained TIPS deflation floor: guarantee that principal cannot fall below face value, protecting investors if prices decline but reducing upside if inflation is strong.

TIPS vs Nominal Treasuries: The Inflation Breakeven Rate Explained Understand the inflation breakeven rate between TIPS and nominal Treasuries—how it's calculated and what it reveals about expected inflation.

Toggle Note A hybrid debt instrument allowing the issuer to switch between cash and payment-in-kind interest on each coupon date, optimizing liquidity flexibility.