Chpt020 Long-Term Debt -公司理财(罗斯).ppt

Chapter 20 Long-Term Debt 20.1 Long Term Debt: A Review 20.2 The Public Issue of Bonds 20.3 Bond Refunding 20.4 Bond Ratings 20.5 Some Different Types of Bonds 20.6 Direct Placement Compared to Public Issues 20.7 Long-Term Syndicated Bank Loans 20.8 Summary and Conclusions 20.1 Long Term Debt: A Review Corporate debt can be short-term (maturity less than one year) or long-term. Different from common stock: Creditor’s claim on corporation is specified Promised cash flows Most are callable Over half of outstanding bonds are owned by life insurance companies pension funds Plain vanilla bonds to “kitchen sink” bonds Features of a Typical Bond The indenture usually lists Amount of Issue, Date of Issue, Maturity Denomination (Par value) Annual Coupon, Dates of Coupon Payments Security Sinking Funds Call Provisions Covenants Features that may change over time Rating Yield-to-Maturity Market price Features of a Hypothetical Bond 20.2 The Public Issue of Bonds The general procedure is similar to the issuance of stock, as described in the previous chapter. Indentures and covenants are not relevant to stock issuance. The indenture is a written agreement between the borrower and a trust company. The indenture usually lists Amount of Issue, Date of Issue, Maturity Denomination (Par value) Annual Coupon, Dates of Coupon Payments Security Sinking Funds Call Provisions Covenants Principal Repayment Term bonds versus serial bonds Sinking funds--how do they work? Fractional repayment each year Good news -- security Bad news -- unfavorable calls How trustee redeems Protective Covenants Agreements to protect bondholders Negative covenant: Thou shalt not: pay dividends beyond specified amount sell more senior debt amount of new debt is limited refund existing bond issue with new bonds paying lower interest rate buy another company’s bonds Positive covenant: Thou shalt: use proceeds from sale of assets for other assets allow redemption in event of merger or spinoff maintain good condit