Current yields for t-bonds, Financial Accounting

ACT presently is all-equity financed. This reflects the stance of the former CEO, a dominant personality who stated repeatedly: "I don't want us to be in thrall to the demands of the banks". However, since appointment of a new chief, change is in the wind and the new CEO is obviously thinking about use of debt to augment the present equity finance. In this regard, the CEO has sent you an email that has just reached your inbox, containing the following points:

a) I am aware that ACT is too small to obtain a bond rating, but in 2010 the Federal budget announced plans for a new scheme that will enable small bond issues (at least $50 million) to be listed on the ASX. What requirements would we have to satisfy in order to qualify for listing?

b) If we made an issue with a face value of $50 million for 5 years, what would be the approximate yield required by investors? My friend, who works for PIMCO (Australia), has told me that we would have to offer about 2.5% p.a. above the yield on Commonwealth Treasury Bonds.

[assume that the bonds would be issued at par, with half-yearly coupons]

c) Pimco has also advised me that there would be issue costs of about 2% of the face value. What impact would that have on an issue?

d) I have heard mention of a 'discount bond'. Would we benefit from this for our bonds? Can you show me how this works?

e) I have seen in recent times that some of the big Aussie banks issued covered bonds, apparently at attractive yields. What are they and are they suitable for us?

To answer the CEO's email, you have researched the current yields for T-bonds, which include the following observations:

maturity

yield

1 year

5.8%

3 years

5.9%

5 years

6.1%

10 years

6.3%

Posted Date: 2/21/2013 1:48:44 AM | Location : United States







Related Discussions:- Current yields for t-bonds, Assignment Help, Ask Question on Current yields for t-bonds, Get Answer, Expert's Help, Current yields for t-bonds Discussions

Write discussion on Current yields for t-bonds
Your posts are moderated
Related Questions
zorn conducted his professional practice through zorn, inc. the corporation uses a fiscal year ending september 30 even though the business purpose test for a fiscal year cannot be

ACT presently is all-equity financed. This reflects the stance of the former CEO, a dominant personality who stated repeatedly: "I don't want us to be in thrall to the demands of t

The excessive frequency of compounding is generally continuous compounding where the interest is compounded immediately. The data for continuous compounding for one year is e APR

SEC reporting implications i) Potentially inaccurate reporting of executive compensation in proxy statements and annual reports ii) Potential violation of securities and Law

Focus Company issued a $30,000, 20 year bond with a stated interest rate of 7%. Assume interest payments are made annually. What is the selling price of the bond if the market ra

Determine the term- Understandability Accounting reports must be expressed as clearly as possible and must be understood by those at whom the information is aimed.

Activity Cost Drivers An element of measurement for the stage (or quantity) of an activity that is performed within a business company.  Hence, a movement cost driver represen

You are an analyst in the corporate finance department of Pet Products, Inc. You have been asked to analyze a potential new product to be introduced. The beef-flavored water will b


what is use of accounting ratios?