Level 1 CFA® Exam:
Bond Analysis

When conducting a non-investment bond analysis:

• focus on the issuer’s liquidity and cash flows,
• prepare detailed financial projections,
• analyze debt covenants thoroughly,
• pay special attention to the corporate structure, capital structure, and debt structure,
• apply the equity-like approach.

When doing a non-sovereign bond analysis:

• if dealing with general obligation (GO) bonds, focus on employment rate, per capita income, per capita debt, demographics, the tax base, volatility of revenues, etc.
• if dealing with revenue bonds (used to finance specific projects), focus on financial aspects of the investment financed, its expected revenues, cash flows, costs, liquidity, etc.