Chapter 19 business borrowing corporate bonds asset

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Chapter 19 - Business Borrowing: Corporate Bonds, Asset-Backed Securities, Bank Loans, and Other Forms of Business Debt A number of factors are considered in pricing a new corporate bond issue. The first is the credit ratings assigned by Moody’s, Standard & Poor’s Corporation, Fitch Ratings, or other rating agencies. Another factor is the “forward calendar” of security offerings, which lists new issues expected to come to market during the next few weeks. Obviously, if a heavy volume of new offerings is anticipated in the near-term, prices will decline unless additional demand appears. Changes in government policy must be anticipated because that policy can have profound effects on security prices. Other factors considered by investment bankers include the size of the issue, how aggressive other bidders are likely to be, and the strength of the “book,” which consists of indications of advance investor interest in the security being offered. 10. Explain what is meant by a private placement . Who purchases privately placed corporate bonds and why?
11. What are the principal advantages to a business borrower from offering debt in the private placement market? Can you see any disadvantages ?

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