A Pragmatist’s Guide to Leveraged Finance: Credit Analysis for Bonds and Bank Debt

13. Structural Issues: Coupons

What’s in this chapter:

• The structure of coupons on loans

• The structure of coupons on bonds

• Other nontraditional coupon structures

• What factors go into determining a coupon

Leveraged finance debt instruments have several types of coupon structures. This chapter describes the most common. Most of them have been at least briefly discussed in earlier chapters. However, keep in mind that periodically some unusual coupon structures appear that do not fall into any of these categories. The chapter begins by describing typical cash pay structures for bank debt and bonds and then goes into various types of deferred-pay structures. The chapter ends with a brief look at how coupons are usually determined.

Loan Coupons ...