Chapter 11

Applying Investment Banking to Fixed Income

IN THIS CHAPTER

check Getting a primer on bonds

check Looking at different types of bonds

check Considering the position of bondholders

check Seeing how bond prices are calculated

check Considering how companies choose to issue debt versus equity

Typically, investment bankers talk about buying up a company’s stock to acquire a company. With their investment banking gurus at their side, convincing them that the shares are undervalued, financial tycoons often target a company’s stock to buy up.

But behind the scenes, companies often have outstanding debt. The holders of this debt, called bondholders, need to be dealt with, too, when a company is bought, restructured, or otherwise put through the financial engineering machine.

Bondholders usually sit quietly in the background, silently accepting their interest payments from the company. But during times of major upheaval at companies, they tend to raise their voices.

The concerns of bondholders are voiced loud ...

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