Investment Banking For Dummies by Matthew Krantz & Robert R. Johnson

Author:Matthew Krantz & Robert R. Johnson [Krantz, Matt & Johnson, Robert R.]
Language: eng
Format: epub
ISBN: 9781119748724
Publisher: Wiley
Published: 2020-03-31T00:00:00+00:00

Chapter 11

Applying Investment Banking to Fixed Income

IN THIS CHAPTER

Getting a primer on bonds

Looking at different types of bonds

Considering the position of bondholders

Seeing how bond prices are calculated

Considering how companies choose to issue debt versus equity

Typically, investment bankers talk about buying up a company’s stock to acquire a company. With their investment banking gurus at their side, convincing them that the shares are undervalued, financial tycoons often target a company’s stock to buy up.

But behind the scenes, companies often have outstanding debt. The holders of this debt, called bondholders, need to be dealt with, too, when a company is bought, restructured, or otherwise put through the financial engineering machine.

Bondholders usually sit quietly in the background, silently accepting their interest payments from the company. But during times of major upheaval at companies, they tend to raise their voices.

The concerns of bondholders are voiced loud and clear when a company that’s the target for acquisition has issued bonds as well as stock. The bondholders are a constituency that a company must deal with. And when a company hits hard times and can no longer keep up with interest payments, the bondholders often find themselves in the pole position, because their claims to the company outrank the stockholders’ claims.

Bondholders may be behind the scenes, but savvy investment bankers know they’re a group of investors not to be trifled with. And that’s where this chapter comes in. Here, we fill you in on what bonds are and the different varieties they come in. Then we explain where bondholders fall in the hierarchy of who gets paid when. We tell you how bond prices are calculated. And we close the chapter with a brief discussion of when companies opt for issuing bonds instead of stocks.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.