A death spiral debt is a type of corporate debt that is characterized by a high interest rate and a short repayment period. This type of debt is often used by companies that are in financial distress and are unable to obtain financing from traditional sources. Death spiral debt is often viewed as a last … Read more
The term “term out” refers to the process of extending the maturity date of a debt instrument. This can be done by issuing a new debt instrument with a longer maturity date, or by entering into a swap agreement with another party. What is a rollover loan? A rollover loan is a type of loan … Read more
Overextension occurs when a company takes on too much debt and is unable to repay it. This can lead to bankruptcy and the loss of the company’s assets. Overextension can also occur when a company takes on too much risk and is unable to meet its obligations. This can lead to a loss of confidence … Read more
Funded debt is the portion of a corporation’s total debt that is backed by assets. In other words, it is debt that can be repaid through the sale of assets. This type of debt is generally considered to be more secure than unsecured debt, which is not backed by assets. A corporation’s funded debt can … Read more
Senior debt is a type of corporate debt that has priority over other debts in the event of bankruptcy. In other words, senior debt holders will be paid first if the company goes bankrupt. Senior debt is often issued in the form of bonds. What is included in long term debt? Debt that is due … Read more
The Merton model is a model used to price corporate debt. The model was developed by Robert C. Merton in 1974. The model takes into account the possibility of default by the firm, as well as the recovery rate in the event of default. The model is used to price debt securities such as bonds. … Read more
Subordinated debt is debt that ranks below other debt instruments in terms of priority for repayment in the event of a liquidation or bankruptcy. In the event of a liquidation, subordinated debt holders only receive proceeds after senior debt holders have been paid in full. In a bankruptcy, subordinated debt holders may only receive payment … Read more
Credit analysis is the process of assessing a company’s financial stability and ability to repay its debts. This includes an analysis of the company’s financial statements, as well as a review of its business model, management team, and competitive landscape. The goal of credit analysis is to provide investors with an understanding of the risks … Read more
The average annual current maturities is the amount of debt that a company has scheduled to come due in the next twelve months. This figure is important because it shows how much cash a company will need to have on hand in order to meet its obligations. A high number may indicate that a company … Read more
Joint liability is a legal term used to describe the situation where two or more people are jointly responsible for a debt or other obligation. In most cases, each person is equally liable for the debt, meaning that they are each responsible for paying back the full amount of the debt. What does jointly but … Read more
