Debt-EquityChoice企业资本结构选择

What About the 5 or 6 “Extra” Days?
• So you noticed a year has more than 360 days. What to do? • Since all months are assumed to have 30 days this means that the accrued interest on August 31 and September 1 will be the same. • Example: Bond pays coupons on January 15 and July 15.
– Operating lease: An agreement, usually short term, allowing the lessee to retain the right to cancel the lease and return the asset to the lessor. – Financial lease (or capital lease): An agreement that generally extends over the life of the asset and indicates that the lessee cannot return the asset except with substantial penalties.
Secondary Market in Corporate Bonds
• The secondary market for corporate debt is largely a broker-dealer market.
– Secondary market makers off to buy and sell particular bonds. – Quoted prices are better thought of as “ads” saying a dealer is here and ready to trade the bond. – To get a price at which you can trade you need to actually call the market maker. Yes, as in pick up a telephone and call.
Leases
• A debt instrument in which the owner of an asset, the lessor, gives the right to use the asset to another party, the lessee, in return for a set of contractually fixed payments.
• Revolver, in which funds flow back and forth between the bank and the firm without any predetermined schedule. Funds are drawn from the revolver whenever the firm wants them, up to the maximum amount specified. They may be subject to an annual cleanup in which the firm must retire all borrowings. • Nonrevolving loan commitment in which the firm may not pay down the loan and then subsequently increase the amount of borrowing.
Quotes and Accrued Interest
• Bond prices are quoted net of accrued interest. • Accrued interest is the amount of interest the current owner has “accrued” since the last coupon payment. • If the accrued interest on a bond is $4, and the quote is $98, then it will cost you $102 per $100 of face amount you buy.
• Generally issued at with a coupon rate so that the bond sells for $1,000 in the open market. This is known as selling at “par.” • The initial coupon rate is typically set by the syndicate desk of the investment bank, which issues the bonds to its (largely institutional) clients.
– Coupon rate equals the sum of the two semi-annual payments divided by 1,000. – If the coupon rate is 6% the bond pays $30 every six months. The 6% represents (30+30)/1000.
• A few corporate bonds are also traded on exchanges (see the New York Bond Exchange listing in the WSJ). But the market is limited to very small retail orders, generally of 10 bonds or less. • Most corporate bonds are not actively traded anywhere.
Commercial Paper
• CoΒιβλιοθήκη Baidumercial paper is a contract by which a borrower promises to pay a prespecified amount to the lender of the commercial paper at some date in the future, usually one to six months. • This prespecified amount is generally paid off by issuing new commercial paper (rollover). • Typically only available to very large companies with very high credit ratings. • These contracts are typically traded in public markets and carry very low interest rates.
Accrued Interest Calculation
• Formula
– Coupon payment of $C. – Last payment at date t0. – Today is date t. – Accrued Interest = C(t-t0)/180.
• Note that half a year has only 180 days!
Bank Loans
• Line of credit
– An arrangement between a bank and a firm that requires the bank to quote an interest rate, typically for a short-term loan, when the firm requests the loan. The bank authorizes the maximum loan amount when setting up the line of credit.
• Leveraged lease (asset purchase financed by a third party), • Direct lease (asset purchase financed by the manufacturer of the asset), and • Sale and leaseback (asset purchased from the lessee by the lessor).
• Loan commitment
– An arrangement that requires a bank to lend up to a maximum prespecified loan amount at a prespecified interest rate at the firm’s request as long as the firm meets the requirements established when the commitment was drawn up. There are two types of loan commitments:
– On March 15 two months have passed and the accrued interest equals C(60/180). – Even February is assumed to have 30 days! On March 31 the accrued interest is C(75/180) and on April 1 it is C(75/180).
Deciphering Bond Quotes
• Bond prices are quoted per $100 of face value (that is 1/10th of their true value). • A bond sells for par if its quoted price is 100. • A bond sells at a premium if its quoted price is above 100. • A bond sells at a discount if its quoted price is below 100.
– In other words a single bond will run you $1,020.
Calculating Accrued Interest
• Corporate bonds accrue interest on a 30 day/360 day year rate. • Why? Because it has always been so.
– Actually, due to the fact that bonds have been around a lot longer than the calculator. – Go ahead try to divided say 6.25 by 365 and then multiply by 14 by hand.
Corporate Bonds
• Bonds are tradable fixed-income securities. • Always have a face amount of $1,000. • Nearly always have semi-annual coupon payments.
Debt-Equity Choice
Playing Games with Taxes and Incentives
Types of Debt Financing
• • • • 1. Bank loans 2. Leases 3. Commercial Paper 4. Corporate Bonds