To pass this unit (requires a Standardised Numerical Grade of 50 or better) the student must pass the final examination.

CLASSES

Face-to-Face Teaching: Generally 20 hours

Timetable: Detailed timetable for classes are on the Centre’s web site www.mafc.mq.edu.au

Consultation Times: Students who wish to contact any of the teaching staff may do so through individual consultation with the lecturer by email in the first instance, if necessary.

REQUIRED AND RECOMMENDED TEXTS AND/OR MATERIALS

Text: Nil

Additional Readings: 

• Additional readings and case study materials are included in the notes. 
• Students should assume these readings are examinable unless otherwise advised.

Lecture Notes: Available in printed form and electronically via iLearn. 

Pre-Unit Materials: Information papers on statistics, regression, accounting and other material may be found at http://www.mafc.mq.edu.au/applications/minimum-knowledge-requirement/pre-course-materials1/. Students should work through this material prior to commencing the degree.  The material will remain a useful reference as students progress through the program.

Useful References: The handbook of Fixed Income Securities. Frank Fabozzi.

Assumed Knowledge: Students should look at the Web link below to obtain notes on the minimum mathematical and statistical knowledge required to undertake the Master of Applied Finance degree: http://www.mafc.mq.edu.au/applications/minimum-knowledge-requirement/pre-course-materials1/

Assumed Access: Access to a computer with word processing and spreadsheet capability is assumed, as is general student computer literacy.

TECHNOLOGY USED AND REQUIRED

Unit iLearn Site: 

• Found by logging on to iLearn ilearn.mq.edu.au, then clicking on Debt Capital Markets.
• This is where you will find forums, downloadable resources and links to important pages. 

Important Notice: 

• It is important that you familiarize yourself with the Unit’s iLearn site. 
• Students should check the Unit’s iLearn site regularly (minimum twice a week and prior to all lectures) and look for updates and distribution of materials (including case studies) related to the unit or assessments and, if relevant, participate in forum discussions. 

TOPIC 1: OVERVIEW AND OBJECTIVES OF THE COURSE

Topics: 

• Definitions and Scope of the Debt Capital Markets
• Types of Debt Instrument
• Concept of Intermediation
• Capital Markets and their interaction with traditional banking markets

TOPIC 2: DEVELOPMENTAL HISTORY OF DEBT CAPITAL MARKETS

Topics: 

• History of Debt Capital Markets and Australian Finance
• Financial Deregulation in the 1980s

TOPIC 3: DETAILED ELEMENTS WITH DEBT SECURITIES MARKETS

Topics:

• The role of Agents and parties to a transaction
•  Credit Rating Agencies and Credit Ratings
• Bringing a Bond or debt security to market and the steps required
• The concept of security interests and covenants
• Derivatives used to hedge and manage the issuance of debt securities

TOPIC 4: DEBT SECURITIES IN DEPTH - PART 1

Topics: 

• Short term debt securities
• Medium term Debt securities

TOPIC 5: DEBT SECURITIES IN DEPTH – PART 2 SECURED DEBT INSTRUMENTS

Topics:

• Conduits and Asset Backed Commercial Paper
• Concept of Residential Mortgage Backed Securitisation
• Covered Bonds in detail
• Credit Default Swaps and how they interact with debt capital
• Credit indexes and other credit derivatives
• Case Studies Credit Derivatives and the GFC

TOPIC 6. PRICING SIGNALS AND HEDGING INSTRUMENTS FOR DEBT OBLIGATIONS

Topics:

• Risk free yield curves, Credit Spreads and the Derivation of risk neutral credit spreads using probability of default methodology

​

This Unit Guide may be subject to change. The latest version is on the Centre’s web site www.mafc.mq.edu.au.

Students should read the Unit Guide carefully at the start of semester.  It contains important information about the Unit.  If anything is unclear, please consult one of the unit lecturers.  

University Policy on Grading:

• Macquarie University’s Academic Senate has established a Grading Policy available at http://www.mq.edu.au/policy/docs/grading/policy.html. Your final result will include: 
  • A grade ranging from Fail to High Distinction; and
  • A Standardised Numerical Grade (SNG). A SNG is not a summation of the individual assessment components, but is allocated on the basis of the performance in all assessment items, providing the examination component is passed.
• It is important to note:
  • The Policy does not require that a minimum or maximum number of students are to be failed in any unit; 
  • Grades will not be allocated to fit a predetermined distribution; and
  • The process of allocating SNGs does not change the rank order of marks among students who pass the unit. 

Specific Unit Grading: 

• To pass this unit (requires a Standardised Numerical Grade of 50 or better) the student must pass the final examination.
• All final grades in the Applied Finance Centre are determined by a grading committee and are not the sole responsibility of the unit convenor.
• The core criteria used to assess student work in this unit are: 
  • Knowledge and understanding: Understanding key ideas, knowledge and use of concepts.
  • Application: Ability to apply theoretical ideas and frameworks in practice and in a critically reflective way. 
  • Reasoning and analysis: Ability to analyse, use critical reasoning and principles to formulate a position, balancing theory and personal reflection. 
  • Professional literacy and research: Understanding of professional factors (language and landscape) and ability to undertake appropriate research. 
  • Communication and presentation: Ability to communicate and present effectively (written and oral, as relevant).
  • Use of mathematical and statistical ideas: Ability to use mathematical and statistical ideas, methods and formulae appropriately. 
• Performance in relation to each of these criteria are assessed against the University’s grading descriptors:

Review of Grade and final examination Script viewing:

• A student who has been awarded a final grade for a unit and who does not believe it is an accurate reflection of their performance, and has grounds for such a claim and can demonstrate those grounds, may apply to have their grade reviewed. 
• For information on requesting a review of grade and/or viewing your final exam script, please refer to the University’s Grade Appeal Policy at http://www.mq.edu.au/policy/docs/gradeappeal/policy.html and MAFC Program Rules & Procedures at http://www.mafc.mq.edu.au.