KIC000037 - Leveraged Issuers They have speculative grade...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Leveraged Issuers They have speculative grade ratings OR have high spreads {c 125 or 150). Can borrow in Revolving/TLA or TLB market. Some ofthese are "fallen angels", but most are not. The most common original issue leveraged loan. borrowers come to market because of a Leveraged Buyout (LBO), Recapltallzatlon, or acquisition. Leverage creates valuable tax shields. Jensen (1986) argues that leverage is a powerful tool to reduce agency costs (free cash flow problem). sox makes leads to extra from having public equity. Middle Market These are firms that are not large enough to have ratings and issue regular bonds. While the number of middle market leans is huge, the loan size is not as large which leads to their total volume share being low. EBITDA typically below $50 Million Loan sizes typically below $200 Million Mostly term loans, but some revolvers Syndication A syndicate is a group of lenders (sell off pieces). Participation
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/06/2011 for the course FIN 428 taught by Professor Hood during the Fall '11 term at Iowa State.

Page1 / 2

KIC000037 - Leveraged Issuers They have speculative grade...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online