LAW 3102 Chapter Notes - Chapter 34: High-Yield Debt, London Agreement On German External Debts, Stock Trader
Document Summary
Debt: notes and bonds do not represent ownership interest. Debt securities aka bonds generally involve the corporation"s promise to repay the principal amount of a loan at a stated time and to pay interest, usually at a fixed rate, while the debt is outstanding. Usually issued under an indenture or debt agreement. High-yield bond (non-investment-grade bond or junk bond): is a bond that is rated below investment grade at the time of purchase. Unsecured bonds, usually called debentures have only the obligation of the corporation behind them. For protection to the unsecured bondholders: indentures frequently impose limitations on the corporations borrowings, payment of dividends and redemption and requisition of its own shares. Provide security of specific corporate property in addition to the general obligation of the corporation. Income bonds: condition the payment of interest to some extent upon corporate earnings.
