公司债券英文文献中英文翻译.doc

届毕业生外文文献翻译 院系别 专 业 班 级 学 号 姓 名 指导教师Corporate Debt When they borrow money, companies promise to make regular interest payments and to repay the principal that is, the original amount borrowed. However, corporations have limited liability. By this we mean that the promise to repay the debt is not always kept. If the company gets into deep water, the company’s assets to the lenders. Clearly it will choose bankruptcy only if the value of the assets is less than the amount of the debt. In practice, when companies goo bankrupt, this handover of assets is far from straightforward. For example, when Pacific Gas and Electric filed for bankruptcy in 2004, the bankruptcy court was faced with several thousand creditors all jostling for a better place in the queue. By the time the company had emerged from bankruptcy 3 years later, it had agreed to make 2,100 separate payments resolving $8.4 billion of agreed claims and had set aside a further $1.8 billion for claims that were still under dispute. Because lenders are not regarded as owners of the firm, they don’t normally have any voting power. Also, the company’s payments of interest are regarded as a cost and are therefore deducted from taxable income. Thus interest is paid out of before-tax income, whereas dividends on common and preferred stock are paid out of after-tax income. This means that the government provides a tax subsidy on the use of debt, which it dose not provide on stock. Some orderly scheme of classification is essential to cope with the almost endless variety of debt issues. Interest Rate The interest payment, or coupon, on most long-term loans is fixed at the time of issue. If a $1,000 bond is issued with a coupon of 10 percent, the firm continues to pay $100 a year regardless of how interest rates change. As we pointed out in Chapter 4, you sometimes enc