BUSI 408 2.14 - Maturity Baa3(NAH) Baa2(Worldcom) Baa1(GTE)...

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BUSI 408 2/14/11 16:14 Worldcome Issue     Raise 4-6$ billion in bonds MCI($37 billion) Gary Brandt, Treasurer Cost of borrowing Alternative      Jumbo Issue o 3yr 1.5b o 5yr 1b o 7yr 2b o 30yr 1.5b Smaller Issue Borrowing from bank Criteria      Secure high price(offer the investors a low yield)—lower the cost of capital  o Depend on bond rating o Asian Crisis—investors go to treasury(treasury yields decline)—helps  o spreads increasing—hurts  o Oversupply of bonds—lower price—higher yields Worldcome old quoted annual rate=6.38%
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Look at Bond Rating, Industry, Maturity 
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Unformatted text preview: Maturity Baa3(NAH) Baa2(Worldcom) Baa1(GTE) Treasure Yield 7yr 6.78 6.44 6.43 5.56% Spread 122 88 84 (Average) 82 Bullish 86-90 Bearish 98-103 More risky, higher yield, higher spread (Spread=Corporate Yield-Treasure Yield) 16:14 16:14...
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This note was uploaded on 05/10/2011 for the course BUSI 408 taught by Professor Zeighamkhokher during the Spring '11 term at University of North Carolina School of the Arts.

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BUSI 408 2.14 - Maturity Baa3(NAH) Baa2(Worldcom) Baa1(GTE)...

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