CHAPTER 1: WHOLESALE FIXED INCOME MARKET
Government Securities: Bonds (Central and State) and Treasury Bills and other government securities
Central Government Bonds
State Government Bonds
Treasury Bills
Cash Management Bills
Market Size and Daily Trade of Government Securities
Municipal Bonds
General Obligation Bonds
Revenue Bonds
Corporate Debt: Public Sector Undertaking (PSU Bonds) and Private Sector Bonds

Special Securities

Securitized Debt Instruments: Single Loan and Pools; Asset Backed and Mortgage Backed

Money Market Instruments: Certificate of Deposits and Commercial Papers
Certificate of Deposits (CDs)
Commercial Papers (CPs)
Call Money Market and Collateralized Borrowing and Lending Obligations (CBLO)
Call Money, Notice Money and Term Money
Collateralized Borrowing and Lending Obligations (CBLO)
Repo Market
Wholesale Fixed Income Market Profile
Market Segments
Market participants
CHAPTER 2: AVENUES FOR AN INDIVIDUAL INVESTOR – CONTRACTUAL RETURNS
Term Deposits with Banks

Recurring Deposits with Banks

Deposits with NBFIs and other corporate entities
NBFI Deposits
Corporate Deposits
Post Office Schemes
Post Office Recurring Deposit Account
Post Office Term Deposit Account
Post Office Monthly Income Account
National Savings Certificates (NSCs)
Senior Citizen Savings Scheme
Public Provident Fund
CHAPTER 3: MUTUAL FUNDS – AVENUE FOR MARKET LINKED RETURNS
Mutual Funds: An avenue to participate in the wholesale fixed income market
What exactly is a Mutual Fund?
Type of Mutual Funds
Categories of Mutual Funds
Mark to Market of Mutual Funds
Accrual concept vis-à-vis the Mark to Market of Mutual Fund
Mutual Funds vis-à-vis contractual Return Products
CHAPTER 4: BONDS AND THEIR TYPES AS PER FEATURES
What is a Bond?
Typical financial flows of a Bond
Types of Bonds as per features
Types of Bonds based on coupon
Types of Bonds based on conversion
Types of bonds based on when you can redeem them
CHAPTER 5: CONCEPTS OF VALUATION, RETURNS AND RISKS
Key Return concepts

Yield
Price and Yield: The Inverse Relationship
Yield Curve
Direction of the yield curve
Changes or shifts in the yield curve
Credit Spreads
Annualizing of returns
Simple Annualized:
Compounded Annualized:
Duration
Convexity
Price Value of a Basis Point (PVBP)
CHAPTER 6: CREDIT RATINGS
Credit Rating Agencies in India

Rating Scales
Short Term Ratings vis-à-vis Long Term Ratings
Mutual Fund Ratings

Sovereign Credit Ratings

Credit Rating of an Issuer vis-à-vis credit rating of an Issue

Credit rating of Structured Obligations

Common Rating Methodologies: General factors considered in arriving at the rating

Mapping of short term and long term credit rating

Credit Enhancements
CHAPTER 7: MAJOR TYPES OF RISKS
Major Types of Risks
Interest Rate Risk / Market Risk
Credit Risk / Counter-party risk
Call Risk / Prepayment Risk
Put Risk
Yield Curve Risk
Inflation Risk
Sovereign Risk
Risks typical to structured obligations
How to mitigate these risks
How to mitigate Interest Rate Risk
How to mitigate Credit Risk
How to mitigate inflation risk
CHAPTER 8: CURRENT TAX STRUCTURE FOR BONDS AND MUTUAL FUND PRODUCTS
Taxation of Bonds
Interest paying bonds
Zero coupon bonds (aka Deep Discount Bonds)
Taxation of Debt Mutual Funds
Dividend Option
Growth Option
Summary

Tax Impact of your investment decision
Interest
Capital Gains
Dividend
Comparison of tax impact of these options on your return
Concept of Tax Drag
Conclusion
Some quick tips…

Snapshot of applicable tax rates
Slab Rates
Capital Gains
CHAPTER 9: INTEREST RATE DETERMINANTS
Inflation
Rate signals from the RBI
Banking System Liquidity
Deposits in the Banking System
Fiscal Deficit and Government Borrowings
Tracking of these determinants, practically
CHAPTER 10: SOPHISTICATED FIXED INCOME PRODUCTS
Credit Default Swaps (CDS)
Separate Trading of Interest and Principal Securities (STRIPS)
Floaters and Inverse Floaters
Swaps
Swaptions
Forward Rate Agreements (FRAs)
Futures contracts in the Fixed Income space
Negative Interest Rate Bonds
CHAPTER 11: COMMON CONCEPTS IN PORTFOLIO THEORY AND DIVERSIFICATION
Yearly returns from each investment avenue
Correlation between different asset classes
Return and Risk of a portfolio
Mean Variance Frontier
Practically Feasible Portfolios
Return-based ranking of Investments
Value of Investment, had it been made at beginning of the year 2000
Compounded annual growth rate (CAGR)
Equal Annual Investment in each year
Conclusion
CHAPTER 12: APPLICATION OF PORTFOLIO THEORY IN REAL LIFE
Case 1 Dweep and Radhika Shah
Present Situation
Restructuring/ Suggestions:
Case 2 Prashant and Sneha Shetty
Present Situation
Restructuring/ Suggestions
Case 3 Paresh Mehta
Restructuring/ Suggestions:
Case 4 Chintan Desa
Restructuring/ Suggestions:
CHAPTER 13: REGULATORY/ INDUSTRY BODIES AND KEY REGULATIONS RELEVANT TO FIXED INCOME MARKETS
Regulatory and Industry bodies
Fixed Income Money Market and Derivatives Association of India (FIMMDA)
Securities Exchange Board of India (SEBI)
Reserve Bank of India (RBI)
Depositories (NSDL and CDSL)
Association of Mutual Funds in India (AMFI)
Clearing Corporation of India Limited (CCIL)
Key Regulations
SEBI Mutual Fund Regulations
CHAPTER 14: GLOSSARY OF KEY FINANCIAL TERMS

Index

There are various fixed income investment avenues in India. However, there is lack of awareness about the relevant concepts and the nuances of the investment avenues. There is dearth of a proper book that explains the relevant concepts applicable in fixed income investments and how the market functions. This book covers the concepts and goes a step further:it is a one-stop shop for someone who wants to know about the debt market in India.