Monday, December 3, 2007

Break the buck

Term for a money market portfolio which losses money. The term stems from the fact that money markets are always priced at $1/share, so if the net asset value falls below $1, (breaks the buck) the fund has lost money.

Tuesday, November 27, 2007

CDO^2 (CDO Squared)

A CDO which has other CDO's as collateral.

Thursday, November 15, 2007


To purchase a bond at its offered price, especially without bidding back.

E.g. "I got lifted on 10mm GNR 2006-14 A at E+20."

This means that the trader had owned $10 million of this GNMA CMO, and sold it to an investor at a spread to the Eurodollar curve of 20bps.

Prop desk

Term for traders who use a dealer firm's capital to try to make profit for the firm. This is different than traders who work to fill customer orders (sometimes called "trading the flow"). A prop trader acts more like a hedge fund, where as flow traders are really more like wholesalers who buy bonds, mark the up a little, and then sell them. Its possible that bond salespeople may use the prop desk's positions as inventory, but that is not its primary purpose.

Tuesday, November 13, 2007


Term for a bond rated below investment grade by one rating agency but investment grade by another.

6 B

Term for a bond rated Baa/BBB.


Short for underlying. Often bonds sold with insurance also are given a rating as if there were no insurance. This is called the underlying rating.

E.g. The bond is rated AAA MBIA with a AA under.

Translation: The bond is rated AAA because of MBIA insurance and would have been rated AA without the insurance.