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Corporate Debt Instruments

Corporate Debt Instruments. Chapter 7. Corporate Bonds. classified by type of issuer public utilities transportations banks/finance industrials Features indentures term bonds notes bonds serial bonds. Corporate Bonds. Features security collateral debenture bonds

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Corporate Debt Instruments

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  1. Corporate Debt Instruments Chapter 7

  2. Corporate Bonds • classified by type of issuer • public utilities • transportations • banks/finance • industrials • Features • indentures • term bonds • notes • bonds • serial bonds

  3. Corporate Bonds • Features • security • collateral • debenture bonds • guaranteed bonds • private placement • provisions • callable • refunding • sinking fund • ratings

  4. High Yield Bonds • original issue high yield bonds • downgraded to high yield • fallen angels • issues in which issuers have significantly increased debt load for LBO or recap. • deferred coupon structure • deferred interest bonds • step up bonds • payment in kind bonds

  5. Medium-Term Notes • notes offered continuously to investors by agent of issuer • variety of maturities • shelf registration • primary market • best-efforts basis • small amts on intermittent basis • agents – 2 to 4 IB firms • rate schedule as spread over Treasuries

  6. Commercial Paper • ST unsecured note issued in open market • short term funding for seasonal and working capital needs • maturities range from 1 to 270 days • rollover risk • ratings • investment vs. noninvestment grade • LOC paper • directly placed vs. dealer placed paper • Tier 1 and Tier 2 paper • sold at discount to par

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