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
The bid-offer spread as a function of daily trading volume is given by :p(q) = a + b*exp(cq) where q = daily trading volume a = 0.08 b= 0.10 c = 0.05 A trader wants to unwind



Q. Describe about Backdating? i) Exercise price is based on a lower share price prior to option grant date. Practice of marking a document with a date that precedes actual date


Q. What is Short Sale? Short Sale - Sale of an item before it is purchased. A person entering into a short sale believes that the price of item will decline between date of the

How to Determine the financial reports of businesses In response to criticisms that financial reports of some businesses aren't clear enough to users, accounting rule makers ha

Analytical Procedures - Substantive tests of financial information that examine relationships among data as a means of obtaining evidence. Such procedures include: (1) comparison o

Create a Trial Balance and Income Statement Cash                                     $18,470    A/R                                         14,333                            A

Balance Sheet Classifications and Relationships: Shelley and Co. has the following balance sheet elements as of December 31, 2012. Land. . . . . . . . . . . . . . . . . . . . . . .