The outstanding notional amount of debt instruments in the world is well over $100 trillion which makes it larger than the global equity markets. Credit, is actually what makes the world go around yet it gets much less billing and excitement than other asset classes. If you think credit is just fixed income, I have a few hedge fund managers you should meet… Some of them will be our occasional guest speakers!
The students will get a bird’s eye view of the entire credit investing business (excluding treasuries) and will drill down to specific segments of this important asset class. At the end of the course, the students will be able to analyze the fundamental drivers behind investing in debt securities and be able to have an intelligent conversation on prices, yields, markets and the different ways to express an investment bias (long, short, hedged). You will get the chance to articulate an investment thesis both in written and oral forms as you defend your investment decision in front of an Investment Committee. The goal of this course is to allow you, as an investor, to incorporate your knowledge of credit instruments into your investment decisions across the asset class spectrum. Or, at the very least, understand how the top right side of a balance sheet thinks and behaves. Some of the evaluation methods are meant to simulate as close as possible to the life of an analyst at a credit focused (or multi strategy) fund.
This course will provide an overview of the concepts of credit, the structure of the market and its participants as well as analytical skills to participate in it as an investor. The course will cover the major components of debt securities including corporate debt, asset backed securities, real estate, municipal and sovereign debt plus more. We will learn how to set up trades on an outright and hedged basis and learn the correct trading terminology to participate in the market. We will cover the decision one makes in security selection, hedging, exchanges, credit activism and much more. We will spend time on municipal and sovereign investing as well and understand what distinguishes this asset class from others. Finally, we will dive into the shallow end of bankruptcy and distressed investing world and learn the skills necessary to participate in it. Most of the course will be from the perspective of the investor but will also cover borrower motivations that impact structure and terms of its borrowings. While some of the concepts are covered in other classes including Debt Capital Markets and Real Estate Finance, the goal of this class is to understand the application of how to invest in the particular asset class.
Adjunct Associate Professor of Business