AFM274 Chapter Notes - Chapter 24: Unsecured Debt, Leveraged Buyout, Debenture

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM274
• Professor: James Thompson

Document Summary

Leveraged buyout (lbo): group of private investors purchases all the equity of a public corporation: requires issuing large amounts of corporate debt. Public debt: corporate bonds are securities issued by corporations, significant amount of invested capital, the prospectus, must be produced to describe the details of the offering for all public offerings. Sovereign debt: issued by national governments: canadian government sells domestic debt to financial market distributors and dealers through the bank of canada, borrows from individuals through canada savings bonds and canada premium bonds. Interest is taxable: munis: issued by u. s. states or municipalities, not taxable at the federal level, serial bonds: single issue of bonds with a number of different maturity dates. Fixed-coupon bond has the same coupon over the life of the bond. If the call provision is cheaper, the issuer will call instead. If bond yields have dropped since the issuer date, the non-callable bond is trading at a premium.