Glossary

Callable Bond

A bond that can be redeemed by the issuer prior to its maturity. Usually a premium is paid to the bond owner when the bond is called. It is also known as a "redeemable bond".

Catastrophe bond

Catastrophe bonds are also known as CAT bonds, usually its a High yield debt instrument issued linking insurance. Mainly such bonds are issued flood-prone zone.

CCAA

The Companies' Creditors Arrangement Act (commonly referred to as the "CCAA" or the "CC, double A") is a Federal Act that allows financially troubled corporations the opportunity to restructure their affairs. By allowing the company to restructure its financial affairs, through a formal Plan of Arrangement, the CCAA presents an opportunity for the company to avoid bankruptcy and allows the creditors to receive some form of payment for amounts owing to them by the company.

CDO

Collateralized Debt Obligation - An asset-back security which uses a portfolio of bonds or loans as collateral, or security.

Certain Sales of Assets

Business balance sheets usually have several fixed assets. A fixed asset is anything that is not used up in the production of the good or service concerned - land, buildings, fixtures and fittings, machinery, vehicles and so on. At times, one or more of these fixed assets may be surplus to requirements and can be sold. A business may desperately need to find some cash so it decides to stop offering certain products or services and because of that can sell some of its fixed assets. Hence, by selling fixed assets, business can use them as a source of finance.

Change in Law

The change in law is one of the trigger event which occurs in the court law(which govern the securities).

Change of Control Trigger

A provision which gives a party to an agreement protection if the controlling shareholding of the other party is transferred. In commercial contracts a change of control clause will often give the party who is not interest in a change in ownership the right to terminate the agreement in the event of a change of control of the other party.

Chapter 11

The chapter 11 of the United States Bankruptcy Code generally for reorganization, usually involving a corporation. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time.

Chapter 13

Chapter 13 is considered ‘re-organisation bankruptcy' for individuals. The debtors negotiates with the creditors for paying the dues in instalments of four to five years thereby the debtor can retain his/her property without liquidating.

Chapter 15

Chapter 15 is filing of bankruptcy proceeding outside US. generally for reorganization, usually involving a corporation. A chapter 15 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time.

Chapter 7

Chapter 7 of the United States Bankruptcy Code provides protection to individual or entities who legally file for bankruptcy, Under this chapter certain assets of the entity is liquidated to pay off debts.

Chapter 9

Chapter 9 of the United States Bankruptcy Code is a debt reorganization measure under which municipalities to get assistance for restructuring its debts.

Clean up Call

Early redemption of the entire balance of a debt issue when a relatively small amount of the original issue remains outstanding. Normally, clean up call is exercised when the outstanding principal falls below 10% of the original.

Collective Action Clause

A collective action clause (CAC) allows a supermajority of bondholders to agree a debt restructuring that is legally binding on all holders of the bond, including those who vote against the restructuring.

Consolidation Event

Consolidation events as substantive improvements in fiscal balances adjusting for the impact of cyclical effects. The determinants of the success of a fiscal adjustment. The results seem to suggest that for these countries expenditure based consolidations have tended to be more successful. By contrast, revenue-based consolidations have a tendency to be less successful.

Constant Maturity Swap

Constant maturity swap is a type of interest rate swap where the rate of interest of any single leg is readjusted according to fixed maturity market rate of a product with a duration extending beyond that of the swap's reset period but not with the LIBOR (London Interbank Offered Rate) or any other floating reference index rate.

Constant Maturity Treasury Rate

The rate used by the U.S. Treasury Department that represents a daily determination of what the yield on a U.S. Treasury bill, note, or bond would be if it were issued on that day. The Treasury Department publishes these rates on a daily and weekly basis in reports called Special Interest Rates.

Contingent Convertible Bonds

The contingent convertible bonds are shortly known as "CoCo" Bond in the financial markets. The CoCo bond can be converted into shares or stock only when the underlying price of the shares rises sharply.

Contingent Interest

Payment of interest is based on only if certain event occurs or certain circumstances happen.

Conversion Ratio

The ratio for the convertibility of a preferred share into a fixed number of common shares, or from a convertible bond into the underlying shares.

Coupon Default

Failure to pay the Coupon Payment for its issued debt.

Coupon Reset

Bond Issuer resets the coupon based on dynamic coupon, floating rate change, or any other conditions

Covered Bond

A bond which has other financial instruments, such as mortgage loans, pledged as security against default.

CPI (Consumer Price Index)

The CPI is a measure of retail inflation. It is calculated by collecting and comparing the prices of a set basket of goods and services, as bought by a typical consumer, at regular intervals over time. Also known as a Retail Price Index.

CR Deliverable

CR Deliverable ("CR" Stands for Credit) is a process in which Underlying obligations identified for delivery when OTC trade is done for Credit Default Swap on an entity.

Credit Auction

Credit auction refers to auction for instruments of defaulted entity. The main objective of auction is to sell the defaulted bonds at higher bid.

Credit Deliverable

Underlying obligations identified for delivery when OTC trade is done for Credit Default Swap on an entity. Here the issuers selected list of obligations will be settled amongst the investors.

Credit Event

Any sudden and negative change in a borrower's credit standing or decline in credit rating. A credit event brings into question the borrower's ability to repay its debt. It is the defining trigger in a credit derivative contract, or credit default swap. If the borrower experiences a credit event, then the buyer of the contract must pay the seller an agreed-upon sum to cover the loss.

Cross Default

A provisions in a bond indenture or loan agreement that puts the borrower in default if the borrower defaults on another obligation. Also known as cross acceleration. This provides more security to the lender.