We are trying to give you an insider’s look into the weekly twists and turns of the Investment Grade Corporate Bond market, and we have our own particular language to describe them. We don’t want to “dumb it down” since we’re pretty sure readers will catch on. But to help you get started, here’s a quick list of terms that you will probably see on a regular basis.
Basis points: you’re a CFA, you know what that is
Spreads moved tighter: that’s positive, just like “equities moved higher”. If spreads move tighter, then bond prices move higher…
Spreads moved wider: …and that’s negative. Wider spreads = lower bond prices.
Excess Returns: credit returns relative to similar duration treasuries. If spreads move tighter, excess returns will be positive. And that’s what you want if you are long credit.
Price Talk: Where the market thinks a new deal might price. Officially, this is always unofficial.
Book: refers to the order book for a new deal. During the marketing period (which generally lasts a whopping 2-3 hours), the syndicate will build an order book, which they hope will be bigger than the amount of debt the Issuer wants to bring to market.
Oversubscribed: that’s what happens if the syndicate was successful in building the book. This is generally positive, because it means the deal should perform well. It also means you probably won’t get all the bonds you want, so that’s negative. Nothing is ever straightforward, is it?
Just remember – we only use jargon to intimidate you.