文档介绍：Debt Markets and Instruments
Federal Reserve Bank of New York
Central Banking Seminar
Preparatory Workshop in Financial Markets,
Instruments and Institutions
Michael Fleming
October 18, 2005
Introduction
• Debt (or fixed e) instrument is obligation of
borrower of funds to make specified interest and
principal payments to lender of funds
• Channels money from those with surplus of funds
to those with productive investment opportunities
• . debt markets largest and most liquid
• Debt market discussion broken into two parts
– Short-term lending/borrowing (money market)
– Longer-term lending/borrowing (bond market)
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The Money Market
• Short-term market for borrowing and lending funds
– Instruments have original maturities of 1 year or less
• Very safe (little default or interest rate risk)
• Highly liquid
• Largely a wholesale, over-the-counter market
• Lenders: low-cost source of temporary funds
• Borrowers: liquid, safe store of value
3
Money Market: Treasury Bills
• Short-term debt obligations of federal government
• 4-, 13-, and 26-week bills, issued weekly
– 4-week bills introduced in 2001
– 52-week bill issuance suspended in 2001
• Cash-management bills issued on an ad hoc basis
• Discount securities – no interest payments
• Considered to be free of default risk
• Highly liquid secondary market
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How Are Treasury Securities Sold?
•(Note that issuer sells securities in primary market)
• Sold petitive single-price auction
• Announced a few days in advance, auction results
released immediately, issued several days later
• Reopening refers to issuance of additional amount
of outstanding security
• Primary dealers (currently 22) have special role
• Securities announced for auction but not yet
issued trade in liquid when-issued market
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How do Treasury Securities Trade?
•(Already issued securities trade in secondary market)
• Multiple-dealer, over-the-counter market
• Round-the-clock trad