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Unformatted text preview: Credit Analysis Chapter 20 FIN 428 Prof. Hood Overview of Bond Credit Analysis .:- In the analysis of the risk of a corporate bond issuer and specific bond issues, there are three areas that are analyzed by bond credit analysts . :. These three areas are: 1. the protections afforded to bondholders that are provided by covenants limiting management's discretion 2. the collateral available for the bondholder should the issuer fail to make the required payments 3. the ability of an issuer to make the contractual payments to bondholders 4 . - - - - - - Overview of Bond Credit Analysis (continued) .:- Analysis of Covenants };. An analysis of the indenture is part ofa credit review ofa corporation's bond issue. ).>. The indenture provisions establish rules for several important areas of operation for corporate mllJ1agement. }> These provisions are safe,guro-ds for the bondholder. ,. indenture provisions should be analyzed carefully....
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- Fall '11