CSC 课程辅导(3)

 TYPES OF BONDS

 Strip    - high quality bond - interest & principal repayment portions separated -principal repayment part is the strip

- deemed interest taxable each year    
 Zero Coupon     - issued not to pay interest

 Foreign Pay    - issued to investors in a foreign country in currency  of that country
 Eurobond    - sold to investors in foreign country, denominated in  currency other than domestic currency of investor

 Floating Rate    - coupon fluctuates based on a formula derived from a  short term interest rate
   

 Junk           -    low quality, high yield    - originally used to  finance takeovers

 Preferred Security    - LT subordinated debenture   - preferred  debenture - maturity 25 to 99 years    - interest can be deferred up to 5 years

BOND OPTIONS (FEATURES)

Call (Redeemable)    -    option of company to buy back bonds at stated price before maturity

-    gives company flexibility


Retractable    -    option of bondholder to shorten the maturity, at specific time
                                    -     attractive if current rates are above coupon
-    bondholder must give notice at specified time prior to retraction
-    retract if ……….

Extendible    -    option of bondholder to lengthen the maturity, at specific time
-    attractive if current rates are lower than coupon
-    extend if …..

Convertible    - debt which can be converted to common equity at option of the bondholder
-    will pay coupon until converted


Sinking Fund    -    money set aside to retire part of debt each year, administered by trustee
-    reduces default risk (being paid gradually), can increase demand
-    if  mkt Pcall price, trustee call

Purchase Fund        -    purchase bonds in market & retire, specified amount/year,
-    if below specified price

Protective  Provisions    - safeguards in bond contract
-    Prior Lien
-    Negative Pledge
-    Working Capital
-    Sale of assets & mergers
-    Disposition of Subsidiaries
-    Restrictions on additional borrowing

Bond Ratings

        - DBRS, Moodys, S&P    - rate securities as to investment grade
-    eg S&P Rating
            AAA - highest quality - earnings stable, industry strong, outlook very good
A  - upper medium quality - substantial protection, more cyclical & susceptible to economic change
BB - lower medium - protection relatively uncertain,
            CCC - highly speculative