Course Description

An intensive 3-day workshop offering delegates the opportunity to come to grips with the instruments traded in the fixed income markets. The role of dealers in the primary and secondary market will be discussed focusing on the calculations of primary issues and secondary market trading. The risks of bond trading will be identified and explained. The program will be interactive with delegates participating in and case studies and practical examples.

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Why the workshop?

The workshop is aimed at giving the delegates insight into the nature fixed income markets with a strong focus on developing markets. The delegates will work with the dealing and settlement mathematics of the full range of fixed income products. The interest rate environment and the risks of trading these markets will be examined. The associated derivative instruments will be covered to give insight into the international market conventions.

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How is the training undertaken?

• Delegates will receive a comprehensive Workbook and copy of the PowerPoint presentation used in the workshop.

• The workshop will be interactive and case study driven.

• The number of delegates attending workshops will be restricted to encourage maximum participation

• Delegates will receive model answers for the exercises contained in the Workbook.

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An overview of Bond and Financial Market terminology

• An overview of the components of the financial markets

• Bonds defined

• Features and characteristics of bonds

• The primary market for bonds

• The secondary market for bonds

• How bonds differ from equities

Types of bonds

• Zero-coupon bonds

• Coupon bonds

• Floating rate notes

• Inflation linked bonds

• STRIPS

• Asset backed securities

• Corporate bonds

• Eurobonds

Market Participants in the Bond Market

• Issuers

• The role of primary dealers

• Tap issues in the secondary market

• Inter-dealer brokers

• Investors

• Settlement of bonds in the market

• Essential criteria for an efficient settlement system

• A Central Depository

The building blocks of Bond Pricing

• Time value of money

• Simple and compound interest with a single cash flow

• Discounting

• Multiple cash flow calculations

• Future value and present value calculations

• Internal rate of return

Pricing bonds – On coupon date

• A coupon bond at issue

• Floating rate notes at issue and in the secondary market

• Pricing a zero-coupon bond

Pricing bonds – Broken dates

• Explaining clean price, dirty price and accrued interest

• Cum-interest bond pricing

• Ex-interest bond pricing

• Understanding the transaction costs and related settlement issues

• Making prices in the secondary market

• The role of primary dealers and market makers

• Spreads and market volume

• Trading in volatile market

• On-the-run and off-the-run bonds

• Understanding bond risks

• The market liquidity

• Trading psychology

• Fundamental analysis

• Technical analysis

• Intra-day trading

• Trading spreads

• Funding long and short bond positions

The cost of carry in the bond market

• Managing open bond positions through the money market using repos

• The essentials of the repo market

• The cost of carry in the repo market

• Risks in the repo market

Applying derivatives to manage open positions in the Fixed Income Market

• Managing short-term exposure using FRAs - Forward rate agreements

• Managing long-term exposure using IRSs - Interest rate swaps

• Interest rate options as an alternative to IRSs and FRAs

Workshop summary and closure

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André holds Bcom degree from UNISA and is a CAIB (SA) with the Institute of Bankers in SA. He has represented the Association of African Institute of Bankers as a subject matter expert in Financial Markets.
Andre is a Fellow of The Institute of Financial Markets and served as a Governor on the board for 9 years. He has extensive knowledge of banking, treasury and finance products. He is currently involved in managing his own consultancy that offers financial market and finance related training throughout Africa Middle East, and Asia.

André worked in the treasury at Nedcor for 9 years, where he traded money and bond markets. While at Nedcor, he was instrumental in establishing the interest rate derivative trading desk. André worked at two major interdealer brokers as a Director responsible for Interest rate derivative broking.
André worked at ABSA as Head of their agricultural derivatives trading desk in 1994. During his time at ABSA, André sat on the executive committee of the SA futures Exchange Agricultural Markets Division.

André worked for the SA Futures Exchange for a year as Assistant General Manager responsible for interest rate product development.
André is the lead facilitator for the South African Banking Treasury Operations Forum-SABTOF for their financial product training programs.
The ACI Financial Markets Association recognizes André as a training provider for both the ACI Dealing and Operations Certificate programs and his students have achieved excellent results in these examinations.

Andre is extensively traveled and has facilitated workshops and training interventions for many of the large multinational financial institutions from introductory to advanced level in Singapore, Hong Kong, Dubai, Malaysia, China, Uganda, Malawi, Zimbabwe, Zambia, Namibia, Kenya, Nigeria, Ghana, and South Africa. He consults to a number of companies on treasury product implementation and hedging.

André authored a book titled “Introduction to Derivatives – A South African Perspective”. The book was prescribed by UNISA for 3rd year B.com students from 2002 to 2005.

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