Understanding Corporate Bond Structures and Classifications
Classified in Mathematics
Written on in
with a size of 3.28 KB
Repayment: Long-term debt is typically repaid in regular amounts over the life of the debt. The payment of long-term debt by installments is called amortization(usually arranged by a sinking fund. Each year the corporation places money into a sinking fund, and the money is used to buy back the bonds).
Seniority: indicates preference in position over other lenders. Some debt issubordinated.In the event of default, holders of subordinated debt must give preference other specified creditors who are paid first.
Security: it’s a form of attachment to property. It provides that the property can be sold in event of default to satisfy the debt for which the security is given. A mortgage is used for security in tangible property. Debentures