财务管理ppt英文课件Cha(3)

Most US corporate debt is callable by firm.
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Methods Of Classifying LongTerm Debt
Method of
principal repayme Secnut rity
versus loan product
Bullet loans: principal repaid in a lump sum at maturity
Interest payment method
Floating or fixed rate debt
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Methods Of Classifying LongTerm Debt
Is debt secured by explicit collateral?
Security
Mortgages: secured by real estate
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6Baidu Nhomakorabea
Bond Covenants
Bond covenants (also called bond indenture): the rules that specify the rights of the lender and the restrictions on the borrower.
Provisions included in the indenture Why do we need covenants?
Chapter 20
Long-Term Debt, Preferred Stock, and Common Stock
Chapter Objectives
Explain the characteristics of debt. Identify the different types of debentures. Outline the provisions of a Bond Covenants. Discuss the different features of both preferred
stock and common stock.
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Solution for Chateau Teyssier
Chateau Teyssier, an English vineyard, was seeking cash to purchase some additional vines and to modernize its production facilities. Their solution is to issue 375 bonds, each costs 2,650 British bonds. The issue raised nearly 1 million pounds, which is roughly $1.5 million. What makes these bonds interesting is that, instead of getting paid with money, the bonds pay their investors with wine. Each June until 2002, when the bonds mature, investors will receive their “coupons.” between 1997 and 2001, each bond will provide six cases of the vineyard’s rose or claret. Starting in 1998 and continuing through maturity in 2002, investor will also receive four cases of its prestigious Saint Emilion Grand Cru. Then, in 2002, they will get their money back.
Equipment trust receipts: secured by transportation equipment
Debentures: no explicit collateral
Callability
Firms could retire and reissue debt if interest rates fall.
Amortized loans: equal periodic principal and interest payments
Capital market instruments:bonds, notes, bills are securities
Syndicated bank loans: the most important loan products
Bond
➢ A long-term debt instrument with a final maturity generally being 10 years or more.
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Methods Of Classifying LongTerm Debt
Short-term: Bills
Maturity
Seniority
Intermediate-term: Notes
Long-term: Bonds Only long-term debt is part of a corporation’s
capitalization
Rank in priority of claims to assets and cash flow. Senior versus subordinated debt
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Maturity
Bill
➢ Zero-coupon debt security with one year or less to maturity at the maturity date.
Note
➢ Medium-term debt security with maturity at issue of 1 to 10 years.