Capped peak on the debt costs

Article Abstract:

The fluctuation of interest rates make borrowing very risky. Companies protect themselves from such risks by employing hedging strategies, including 'locking into current rates' and 'full loss cover.' Locking in is the least expensive interest rate hedging method butit can prove disastrous if interest rates drop suddenly. Full 'no loss' cover protects borrowers from risk as well as offers an opportunity for market gain, but it can be extremely costly. Banks and other vendors offer a wide variety ofinterest rate hedging instruments. The Royal Bank of Scotland, for instance, offer fixed rate borrowing, interest rate swaps, forward rate agreements, base rate caps, libor caps, interest rate collars and financial futures. Before hedging, firms must first determine if their exposure is definite or contingent. Next, they should study the exposure's potential impact on the firm's finances and then select a course of appropriate action.

Methods, Management, Hedging (Finance), Interest rates, Commercial loans

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The big divide

Article Abstract:

Management buy-outs (MBOs) entail problems not encountered in ordinary sale transactions. Firstly, this type of corporate transaction requires the identification of all interests involved. For the buy-out company, these interests are conditioned by marital, personal and taxation requirements and executive position within the company. Differences in share classes in the MBO held by management and institutions also affect transaction proceedings. To resolve these different interests, sales advisers can be employed to look for the company's general interest. Purchasers of the MBO will likewise demand warranties and indemnities to identify the company's financial and taxation standing. Price negotiators will also seek the best possible terms while considering the different share classes.

Planning, Marketing, Acquisitions and mergers, Management buyouts

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Retiring the national debt

Article Abstract:

Great Britain has been slowly retiring its national debt by using some of its budget surplus in open market purchases of government bonds. The trend, if allowed to continue, will mean a lower supply of government debt instruments in the market, which will drive up their prices. Institutional investors will consequently demand higher dividend payments from their companies, and corporations may fill the gap by their issuance of long-term corporate debts.

United Kingdom, National debt, Public debts, Long-term financing, Long term financing, Great Britain

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