RSM221H1 Chapter Notes - Chapter 14: Unsecured Debt, High-Yield Debt, Private Placement
Document Summary
Bond interest payments generally made semi-annually but interest rate is expressed as an annual rate. Firm underwriting (taking the risk of the bond from the corporation), best efforts underwriting (sell the bond for a commission), and private placement (sell directly to an institution) >bearer or coupon bond not in owner"s name so easily transferrable. >unsecured debt -> debenture bonds or junk bonds. >term bonds mature on a single date; serial mature in instalments, perpetual have long terms. >income bonds pay no interest unless issuing company is profitable. >revenue bonds are paid out from a specific revenue source. >deep discount bonds (zero-interest debentures/bonds/notes) have little or no interest, sold at a large discount. Commodity-backed bonds: also called asset-linked debt; redeemable in amounts of a commodity. >callable gives the issuer the right to call and retire the debt before maturity. >convertible allows the holder or the issuer to convert the debt into other securities.
