14

I am not an investment banker, but usually the procedure is something like this: (0) The IB knows the yield of existing bonds with the same maturity and credit rating, so it is not too difficult for them to estimate the yield of the new bonds. They usually announce this as a spread above a benchmark (Ex: "We estimate the new bonds will yield 25 to 50 bps ...


4

In addition to @AlexC answer there are 2 additional key points. 1) if the issue is oversubscribed the IB / syndicate team will choose the allocation to each client usually based on their relative importance in terms of future business. 2) There is a specific pricing call that takes place between the issuer and investment banks trading teams. This ...


2

Bloomberg has a Python interface, so this sort of thing is much easier than it used to be when you had to encapsulate the COM or C++ interface. First, set up a session as in the Bloomberg documentation, then form a request refDataService = session.getService("//blp/refdata") request = refDataService.createRequest("ReferenceDataRequest") Now set up your ...


2

High level Flow of funds comparative analysis for the U.S., Japan, and Euro Area by the bank of Japan. Country level report from the ECB. It is an 800+ page report so the link may take time to load (alternatively go to ECB data warehouse/reports/Euro Area accounts). Canadian financial flow accounts data.


2

Accounting for derivatives varies by jurisdiction and by user type, so let's not get bogged down in that. Let's focus on the economics: derivatives are usually legally pari passu with senior debt (have the same seniority in bankruptcy). However, they may in effect get paid earlier- for example, derivatives are usually subject to a CSA (credit support ...


1

Given an annually payable loan of: $$ \begin{split} D &= \text{notional} \\ r_f &= \text{risk free rate for discount }\\ r_D &= \text{interest rate payable on outstanding balance}\\ A &= \rho D = \text{fixed yearly amortization amount}\\ N &= 1/\rho = \text{number of annual payments} \\ \end{split} $$ The PV of the loan is: $$PV = \...


1

You can use the company specific yield gap( dividend yield / company's long term debt yield) as an indicator to switch between debt and equity. Larger yield gap indicates equity is cheaper compared to debt.Tons of such indicators are available which compare the relative valuation of debt and equity. You can overlay it with momentum also. Someone suggested ...


1

I answer from the point of view of a small price-taker investor. Investing in debt and equity depends on very different analysis. If on one side you have the ability and willingness to repay depending on the credit quality of an issuer, on the other you have the ability of generating consistent cashflows with a well managed liquidity and long-term growth. ...


1

Probably a lot easier to use the Bloomberg add-ins in excel, write a macro to cycle the equities your looking for and retrieve the associated CUSIPs.


1

If you imply real assets as the "left" side of the balance sheet, then there are recent papers which examine simultaneously both the option to invest (growth options), issuance of debt/equity and the ability to determine endogenously the default barrier. Although, their complexity may require numerical solutions and increased mathematical complexity that ...


1

The point is exactly that, $r_d$ depends on $X$, meaning that: $r_d(X)$. So in practice you will have an answer $X=f(r_d)$. Where X is a function of $r_d$. Also, if you change your capital structure, given your Hamada's equation, $r_m$ will also be a function of $X$ and therefore in fact your optimal $X$ should be : $X=f(r_d,r_e)$. You cannot solve this ...


Only top voted, non community-wiki answers of a minimum length are eligible