Capital Markets Examiner School, Providence, RI

Credit Risk

 Municipal Securities  Where do broad predictions go wrong (see picture), why contagion doesn’t really exist and how many other Puerto Rico’s and Detroit’s are out there?  Fundamental Investment Guidance on credit evaluation is key just like with other credits.

 Corporate securities

 Simply large loan so analysis is the same as Loan Credit Underwriting.  Most banks stay within the financial sector for investments.  Does the bank have adequate credit administration for the loan portfolio?  Worldcom

Credit Risk

 US Agency Debt

 GNMA, FNMA, FHLMC

 Explicit Guarantee versus Implicit Guarantee  Explicit – GNMA (a unit of HUD),  Implicit – FNMA/FHLMC (via FHFA), FHLB, Tennessee Valley Authority