14-1 Century Bonds 1

14-1 Century Bonds 1 - The 100-Year Bond is Coming Back but...

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The 100-Year Bond is Coming Back, but is it Good? Source: Wall Street Journal, 22 November 1995 Taking advantage of some of the lowest long-term rates in a generation, Columbia/HCA Healthcare in Nashville, Tenn., issued $200 million of century debt Monday. More such issues are on the way, say Wall Street investment bankers and corporate consultants. "I know of at least three companies that are thinking of doing it," says Fred Zuckerman, an independent consultant and former treasurer at International Busi- ness Machines, RJR Nabisco Holdings and Chrysler. Adds Rob Goldberg, head of capital markets for Merrill Lynch & Co., "I've had a lot of interest from' companies in the structure." But the re-emergence of 100-year bonds isn't alto- gether positive for the bond market. The last time they blossomed in 1993 was just before interest rates rose sharply, heralding the bond market's worst year on record, 1994. A bad bond market is even worse for holders of 100- year debt because its prices fluctuate more drastically than shorter maturities from 10 to 30 years customar- ily used by most corporations. For example, 100-year
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This note was uploaded on 05/03/2010 for the course ACCT 202 taught by Professor Yang during the Spring '10 term at UPenn.

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