Introduction to Credit Markets

Business viability, government investment, personal consumption, and economic growth all depend on the availability and cost of credit. This course provides a broad overview of credit instruments and credit markets, covering the determinants of risk and return for debt securities, the techniques by which firms and governments approach the debt market, the economic issues that can ensue, and the mechanisms that have evolved to address them. Specifically, the course will cover topics including capital structure; the macroeconomics of debt; the money market; commercial paper; trade credit; securities lending; liquidity transformation and yield curve arbitrage; bank runs and liquidity crises; corporate bonds; government bonds; municipal bonds; yield, duration, and convexity; structured notes; securitization; derivatives and synthetics; leveraged loans; subordinated debt; private equity and leveraged buyouts; and debt contracts. Students will learn principles for analyzing, valuing, and pricing various debt securities and their derivatives, and should emerge with an understanding of the instruments, players, analytical frameworks, quantitative methodologies, and vocabulary of credit markets.