文档介绍：chapter 20 Long-Term Debt
Corporate Finance Ross ?? Westerfield ?? Jaffe
Sixth Edition
20
Chapter Twenty
Long-Term Debt
Prepared by
Gady Jacoby
University of Manitoba
and
Sebouh Aintablian
American University of Beirut
Chapter 20 Long-Term Debt
203>.1 Long Term Debt: A Review
The Public Issue of Bonds
Bond Refunding
Bond Ratings
Some Different Types of Bonds
Direct pared to Public Issues
Long-Term Syndicated Bank Loans
Summary and Conclusions
Long Term Debt: A Review
Corporate debt can be short-term (maturity less than one year) or long-term.
Different mon stock:
Creditor’s claim on corporation is specified
Promised cash flows
Most are callable
Over half of outstanding bonds are owned by life panies & 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
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 pany. 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---unfavourable calls
How trustee redeems
Protective Covenants
Agreements to protect bondholders
Negative covenant: Thou shalt not:
pay dividends beyond specified amount
sell more senior debt and amount of new debt is li