16655 Lecture Notes - Lecture 16: Senior Debt, National Debt Of The United States, Commercial Paper
Document Summary
Sources of capital: ordinary equity, preferred/subordinated equity, debt, senior debt (secured/unsecured, junior or mezzanine debt (secured/unsecured, hybrid securities (mixture of debt and equity characteristics) Companies diversify debt as volumes increase, us bonds are preferred by bhp and rio. Sources of debt used by areits: bank debt, a"s (bonds, emtn"s, us bonds (144a, us private placement market (reg d, project finance. Bank debt: banks typically charge establishment fees, which notionally reflect the cost of undertaking credit analysis and monitoring through the life of the loan. Margin and interest are typically charge quarterly or monthly and charged as a percentage of the amount actually drawn under the loan facility. How banks determine to whom they lend the 5cs: character quality of the sponsor . Do they have a history of repaying debt in full and on time: collateral quality of the security. Is the bank"s loan position senior or subordinated: capacity cashflow sustainability.
