scholarly journals The Rise of Covenant-Lite Bond Contracting

2021 ◽  
pp. 0148558X2098738
Author(s):  
Miles Gietzmann ◽  
Helena Isidro ◽  
Ivana Raonic
Keyword(s):  
Public Debt ◽  
Empirical Support ◽  
High Yield ◽  
Lower Yield ◽  
Debt Contracts ◽  
Debt Contracting ◽  
Yield Spreads ◽  
Accounting Performance ◽  
Potential Benefits ◽  
Performance Statistics

We investigate the trading and yield effects of covenant-lite (cov-lite) high-yield bond contracts, which have a restricted (lite) set of covenants. The excluded covenants often are those that use accounting performance measures. Although much research has focused on the potential benefits of accounting as a basis for debt contracting, little is known about settings where it may be optimal to exclude accounting performance statistics from public debt contracts. We find that cov-lite high-yield bonds have a higher trading turnover and lower yield spreads. Our findings provide empirical support for theory, which predicts, for optimal bond covenant design, that a trade-off between improving trading ease versus enhanced investor protection needs to be managed. These results enhance our understanding of the limits of accounting’s role in (bond) contracting design.

scholarly journals Corporate Bankruptcy and Directors’ Reputation: An Empirical Analysis of the Effects on Public Debt Contracts

2021 ◽  
pp. 0148558X2110155
Author(s):  
Stefano Gatti ◽  
Mariya N. Ivanova ◽  
Gabriel Pündrich
Keyword(s):  
Public Debt ◽  
Global Financial Crisis ◽  
The United States ◽  
Debt Contracts ◽  
Macroeconomic Shocks ◽  
Debt Contracting ◽  
Investment Policies ◽  
Professional Experiences ◽  
Bond Issuers ◽  
The Global Financial Crisis

This article investigates the link between board members’ past professional experiences and the terms and conditions of the debt contracts of their current firms. In particular, we examine whether directors’ past bankruptcy experience affects the pricing and nonpricing terms of public debt contracts. Using a sample of 8,142 bond issues in the United States in the period 1995 to 2015, we document higher credit spreads and smaller bond sizes for firms with such directors, suggesting that bondholders are concerned about past bankruptcy experience. Our results remain robust to different model specifications. This effect is moderated for bankruptcies that are likely driven by macroeconomic shocks such as the dotcom bubble and the global financial crisis. We also show that our findings are not explained by bond issuers with an elevated risk of default and seem instead to be driven by directors serving on key monitoring committees, indicating that prior bankruptcy experience raises concerns about the company’s corporate governance. Finally, mediation analysis offers some evidence of a limited negative indirect effect of prior bankruptcy experience on the terms of debt contracts through the firm’s financial and investment policies. Overall, our findings suggest that lenders incorporate information about past professional experiences of directors into public debt contracting.

Customer concentration types and public debt contracts

2020 ◽  
Vol 19 (2) ◽  
pp. 247-269
Author(s):  
HyunJun Na
Keyword(s):  
Positive Impact ◽  
Corporate Bond ◽  
Lower Yield ◽  
Debt Contracts ◽  
Yield Spreads ◽  
Content Type ◽  
Exogenous Shocks ◽  
Congressional Committees ◽  
The Us ◽  
Us Government

Purpose This paper aims to examine how a firm’s customer concentration, which is the amount of sales between a supplier firm and the major customers, affects corporate bond contracts. This study also investigates how the types of customer concentration have a significant impact on bond contracts. Design/methodology/approach The research uses the Compustat’s segment customer database and the Mergent fixed income securities database, which provides details about publicly offered US bond issues and issuers. The sample also includes the US Congressional committees’ data from the 96th to 115th congresses. To control any endogenous concerns, the author uses changes in the seniority of US senators on powerful committees and the American Recovery and Reinvestment Act of 2009 (ARRA) as exogenous shocks. For a robustness test, the author also uses the propensity score-matched pairs. Findings While higher customer concentration, on average, leads to higher yield spreads and strict covenants, firms that have the US Government as a major customer pay lower yield spreads and have higher issue ratings. However, as a firm’s sales depend too heavily on the US Government customer channel, the bond issuance is likely to have lower issue ratings. The main findings also show that firms with government concentrations take advantage of political links, leading to lower yield spreads after two exogenous events. Originality/value The findings in this paper show the importance of a firm’s customer types in bond markets by emphasizing the positive impact of the US Government as the sales channel. Exogenous event studies based on the propensity-matched sample alleviate the endogenous concerns.

Accounting Quality and Debt Contracting

2008 ◽  
Vol 83 (1) ◽  
pp. 1-28 ◽  
Author(s):  
Sreedhar T. Bharath ◽  
Jayanthi Sunder ◽  
Shyam V. Sunder
Keyword(s):  
Public Debt ◽  
Information Access ◽  
Bank Loans ◽  
Accounting Quality ◽  
Debt Contracts ◽  
Private Debt ◽  
Debt Contracting ◽  
Interest Spreads ◽  
Processing Abilities ◽  
The Impact

We study the role of borrower accounting quality in debt contracting. Specifically, we examine how accounting quality affects the borrower's choice of private versus public debt market and how the design of debt contracts vary with accounting quality in the two markets. We find that accounting quality affects the choice of the market, with poorer accounting quality borrowers preferring private debt, i.e., bank loans. This is consistent with banks possessing superior information access and processing abilities that reduce adverse selection costs for borrowers. We also find that accounting quality has an economically significant but differential impact on contract design in the two markets consistent with differences in recontracting flexibility across the two markets. In the case of private debt, since there is greater recontracting flexibility, both the price (i.e., interest) and non-price (i.e., maturity and collateral) terms are significantly more stringent for poorer accounting quality borrowers, unlike public debt where only the price terms are more stringent. The impact of accounting quality on interest spreads of public debt is 2.5 times that of the private debt, since the price terms alone reflect the variation in accounting quality.

Influence of meteorological factors on potato yield in the conditions of the Right-Bank Forest-steppe

2018 ◽  
Vol 1 (94) ◽  
pp. 55-61
Author(s):  
R.O. Myalkovsky
Keyword(s):  
Meteorological Factors ◽  
Weather Conditions ◽  
Climatic Conditions ◽  
Potato Yield ◽  
High Yield ◽  
Forest Steppe ◽  
Potato Tubers ◽  
Middle Aged ◽  
Lower Yield ◽  
The Right

Goal. The purpose of the research was to determine the influence of meteorological factors on potato yield in the conditions of the Right Bank Forest-steppe of Ukraine. Methods.Field, analytical and statistical. Results.It was established that among the mid-range varieties Divo stands out with a yield of 42.3 t/ha, Malin white – 39.8 t/ha, and Legend – 37.1 t/ ha. The most favourable weather and climatic conditions for the production of potato tubers were for the Divo 2011 variety with a yield of 45.9 t/ha and 2013 – 45.1 t/ha. For the Legenda variety 2016, the yield of potato tubers is 40.6 t/ha and 2017 – 43.2 t/ha. Malin White 2013 is 41.4 t/ha and 2017 42.1 t/ha. The average varieties of potatoes showed a slightly lower yield on average over the years of research. However, among the varieties is allocated Nadiyna – 40.3 t/ha, Slovyanka – 37.2 t/ ha and Vera 33.8 t/ha. Among the years, the most high-yielding for the Vera variety was 2016 with a yield of 36.6 t/ha and 2017 year – 37.8 t/ha. Varieties Slovyanka and Nadiyna 2011 and 2012 with yields of 42.6 and 44.3 t/ha and 46.5 and 45.3 t/ha, respectively. Characterizing the yield of potato tubers of medium-late varieties over the years of research, there was a decrease in this indicator compared with medium-early and middle-aged varieties. However, the high yield of the varieties of Dar is allocated – 40.0 t/ha, Alladin – 33.6 t/ha and Oxamit 31.3 t/ha. Among the years, the most favourable ones were: for Oxamit and Alladin – 2011 – 33.5 and 36.5 t/ha, and 2017 – 34.1 and 36.4 t/ha, respectively. Favourable years for harvesting varieties were 2011 and 2012 with yields of 45.7 and 45.8 t/ha. Thus, the highest yield of potato tubers on average over the years of studies of medium-early varieties of 41.2-43.3 t / ha were provided by weather conditions of 2011 and 2017 years, medium-ripe varieties 41.0-41.1 - 2012 and 2011, medium- late 37,6-38,5 t / ha - 2012 and 2011, respectively.

The Relation between Accounting Information in Debt Covenants and Operating Leases

2015 ◽  
Vol 29 (4) ◽  
pp. 969-996 ◽  
Author(s):  
Daniel Gyung H. Paik ◽  
Joyce A. van der Laan Smith ◽  
Brandon Byunghwan Lee ◽  
Sung Wook Yoon
Keyword(s):  
Balance Sheet ◽  
Accounting Information ◽  
Debt Covenants ◽  
Debt Contracts ◽  
Debt Contracting ◽  
Income Statement ◽  
Operating Leases ◽  
The Impact ◽  
Accounting Ratios ◽  
Lease Accounting

SYNOPSIS Proposed changes by the FASB and the IASB to lease accounting standards will substantially change the accounting for operating leases by requiring the capitalization of future lease payments. We consider the impact of these changes on firms' debt covenants by examining the frequency of income-statement- versus balance-sheet-based accounting ratios in debt covenants of firms in high and low Off Balance Sheet (OBS) lease industries. Based on debt contracts from the 1996–2009 period, our results provide evidence that lenders focus on balance sheet (income statement) ratios in designing debt covenants for borrowers in low (high) OBS lease industries. Further, the use of balance-sheet- (income-statement-) based covenants falls (rises) faster in high OBS lease industries than in low OBS lease industries as the use of OBS leasing increases. This evidence indicates that OBS operating leases influence lenders' use of accounting information in covenants, suggesting that creditors consider the impact of OBS leases when structuring debt agreements. These results also suggest that the proposed capitalization of OBS leases may not result in firms violating loan covenants but will make the balance sheet a more complete source of information for debt contracting by removing the need for constructive capitalization of OBS leases.

Global Wars, Public Debts, and the Long Cycle

1983 ◽  
Vol 35 (4) ◽  
pp. 489-516 ◽  
Author(s):  
Karen A. Rasler ◽  
William R. Thompson
Keyword(s):  
Economic Development ◽  
Great Britain ◽  
Longitudinal Analysis ◽  
Public Debt ◽  
Significant Proportion ◽  
Empirical Support ◽  
Long Cycle ◽  
Public Credit ◽  
The World

The explanation of the rise and fall of the world system's leading powers in terms of uneven economic development tends to overlook the role of the creation and management of public credit and national debts. Prior to 1815, the Netherlands and Great Britain owed a significant proportion of their respective victories over the larger and wealthier states of Spain and France to the development of competitive financial capabilities. Winning, however, leads to higher absolute debt burdens which, prior to 1945, encouraged postwar reductions in governmental expenditures. In this fashion, world leaders have contributed to the erosion of their preponderant capability positions before the emergence of international rivals. These ideas are elaborated within the context of George Modelski's long cycle of world leadership theory and through a brief review of war-related financial problems between 1500 and 1815 and the consequent development of national debts. The longitudinal analysis of British and American public debt data provides collaborating empirical support.

scholarly journals Fractionation of lignosulphonates released during the early stages of delignification

1983 ◽  
Vol 61 (2) ◽  
pp. 416-420 ◽  
Author(s):  
Norman G. Lewis ◽  
David A. I. Goring ◽  
Alfred Wong
Keyword(s):  
Molecular Weight ◽  
High Performance ◽  
Black Spruce ◽  
Gel Permeation Chromatography ◽  
Bimodal Distribution ◽  
High Yield ◽  
Low Molecular Weight ◽  
Lower Yield ◽  
Spruce Wood ◽  
Gel Permeation

High-yield spent bisulphite liquor (HY-SBL) from sulphonated black spruce wood (Piceamariana) was fractionated by gel permeation chromatography (GPC) and by high-performance liquid chromatography (HPLC). The GPC fractionation gave a wide bimodal distribution, whereas with HPLC, a more detailed resolution was seen with the bulk of the fraction giving several clearly defined peaks. The paucidisperse material was further concentrated by a bulk fractionation of the crude SBL which included complexing the lignosulphonates with dicyclohexylamine. The isolated paucidisperse material was found to be dialyzable and to constitute 90% of the lignosulphonate in the sample of SBL. If the bisulphite pulp obtained was recooked in fresh acid sulphite liquor to a lower yield, most of the lignosulphonate dissolved was widely polydisperse with no indication of the discrete components resolvable by HPLC. However, 25% of the lignin made soluble was in the form of the paucidisperse fractions. In all, we were able to obtain about 50% of the lignin in spruce wood as a relatively low molecular weight lignosulphonate resolvable into discrete fractions by HPLC.

scholarly journals Design and Analysis of a Propeller Blade Used for Marine Engine

2019 ◽  
pp. 440-445
Author(s):  
Gondi Konda Reddy ◽  
B. Sravanthhi
Keyword(s):  
Pitch Angle ◽  
High Yield ◽  
Maintenance Cost ◽  
Aluminum Bronze ◽  
Nickel Aluminum ◽  
Marine Propellers ◽  
Cfrp Composite ◽  
Potential Benefits ◽  
Superior Corrosion Resistance ◽  
Nickel Aluminum Bronze

Most of the marine propellers are made of metal material such as bronze or steel. The advantages of replacing metal with CFRP composite materials are that the latter is lighter and corrosion-resistant. Another important advantage is that the deformation of the composite propeller can be controlled to improve its performance. Propellers always rotate at a constant velocity that maximizes the efficiency of the engine. When the ship sails at the designed speed, the inflow angle is close to its pitch angle. When the ship sails at a lower speed, the inflow angle is smaller. Hence, the pressure on the propeller increases as the ship speed decreases. The propulsion efficiency is also low when the inflow angle is far from the pitch angle. If the pitch angle can be reduced when the inflow angle is low, then the efficiency of the propeller can be improved. In addition the load-bearing fibers can be aligned and stacked to reduce fluttering and to improve the hydrodynamic efficiency. Composites can offer the potential benefits of reduced corrosion and cavitations damage, improved fatigue performance, lower noise, improved material damping properties, and reduced lifetime maintenance cost. Traditionally marine propellers are made of manganese-nickel-aluminum-bronze (MAB) or nickel-aluminum-bronze (NAB) for superior corrosion resistance, high-yield strength, reliability, and affordability.

scholarly journals Strawberry Cultivar Evaluation Using Mathematical Indices

HortScience ◽  
1992 ◽  
Vol 27 (11) ◽  
pp. 1164
Author(s):  
Shahrokh Khanizadeh ◽  
Mamdouh A. Fanous ◽  
Michel J. Lareau ◽  
Deborah Buszard
Keyword(s):  
High Yield ◽  
Lower Yield ◽  
Single Index ◽  
Large Numbers ◽  
Early Ripening ◽  
Strawberry Cultivar

Three mathematical indices were developed to estimate: a) potential for early dollar return or early ripening (IE), b) concentrated cropping (IC), and deviation or similarity of a genotype to known cultivars (ID). Early ripening genotypes with high yield early in the season will have larger IE values than late genotypes with lower yield early in the season. Genotypes with few harvests will have larger IC values than those requiring several harvests. The ID index helps to identify and group genotypes with similar characteristics. These indices condense large numbers of values or arrays of traits into single index values, thereby simplifying genotype comparisons.

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