清华大学公司财务讲义1.ppt

Taotao Chen Tsinghua Chapter 10Long Term Financing Basic Content Debt Financing Equity Financing Capital Structure Managerial Consideration Debt Financing Main Content Bank loan (Term Loan) Bond Characteristics of Bonds Different Types of Bonds Advantages and Disadvantages of Debt Financing Bank loan (Term Loan) A term-loan is a contract under which a borrower agrees to make a series of interest and principal payment, on special dates, to a lender. So it is actually private placement debt, as opposed to public offerings of bonds. Investment bankers are generally not involved. Bank loan (Term Loan) Features of bank loan compared with public offering Three basic advantages: Speed Flexibile Low issuance cost Term Loan Features of bank loan compared with public offering Other Features: Involve small borrower: these private placements usually involve smaller companies whose credit conditions must be analyzed. Amortizing: private placements (term-loans) are usually amortized in equal installments over the life of the loan. Bond Like a term loan, a bond is a long-term contract under which a borrower agrees to make payments of interest and principal, on special dates, to the holder of the bond. Characteristics of Bonds (cont’d) Features Compared With Term Loan Unlike a term loan, a bond issue is generally advertised, offered to the public, and actually sold to many different investors. Unlike a term loan, a bond’s interest rate is generally fixed; and most bonds are not amortized, that is, no principal payments are made during the life of the issue. Characteristics of Bonds (cont’d) Features Compared With Term Loan (continued) Typically, bonds are sold by large, well-know companies with strong financial positions. Thus, bond buyers do not need to spend much time and effort gathering information about the issuer since buyers are aware of the company and its rating. Different Types of Bonds Traditional Types of Bonds: Mortgage Bonds (including Secondary Mortgage