Pricing Partially Guaranteed Bonds : Valuation of Bonds Benefitting from a World Bank Partial Guarantee
| Autor: | Launay, Vincent |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2016 |
| Předmět: |
PAYMENT
VALUATION TOTAL DEBT DISCOUNT RATES COUPON BONDS EVENT OF DEFAULT BOND MATURITY FINANCING DISCOUNT BOND ISSUES INCOME DEBT CAPITAL INSTRUMENT TYPES OF INSTRUMENTS YIELD CURVES MATURITY DATE DEBT SERVICE INVESTORS BONDS GUARANTEE SHARES BANK CREDIT RATING AGENCIES CHECK YIELD TO MATURITY ISSUANCES MARKETS TIME OF DEFAULT BASIS POINTS PAYMENT OBLIGATIONS LIQUIDITY PREMIUM DEFAULTS LIQUIDITY INSTRUMENTS PAYMENT OF INTEREST DISCOUNT RATE DEBT CREDIT RISK EQUAL SHARE GUARANTEES BOND ISSUANCES MARKET TREASURIES BOND YIELD FREE BOND PAYMENTS CASH FLOW PARTIAL GUARANTEE COUPON TREASURY YIELD PROBABILITY OF DEFAULT SOVEREIGN BOND BONDHOLDERS CAPITAL MARKET GUARANTEE PAYMENTS PRINCIPAL PAYMENTS VALUE SECURITY RISK BANK GUARANTEE RATING AGENCIES INTERNATIONAL DEVELOPMENT CAPITAL MARKETS PRINCIPAL AMORTIZATION RECOVERY RATE TREASURY BOND MARKET INSTRUMENT REMAINING DEBT PRICE BOND TREASURY DEFAULT CREDIT DEBT SERVICE PAYMENT BOND ISSUANCE BULLET MATURITY BOND MATURITY INTERNATIONAL BANK DEFAULT PAYMENT FUTURE CREDIT RATING BANK GUARANTEES REPAYMENT ISSUANCE VALUATION METHOD INTEREST TRADING DISCOUNTED CASH FLOW CASH FLOWS FACE VALUE PAYMENT DEFAULT BOND ISSUE SHARE PRESENT VALUE PRINCIPAL PAYMENT PAYMENT OF PRINCIPAL POTENTIAL INVESTORS |
| Popis: | The absence of sovereign bond issuances with World Bank guarantee support for almost 15 years and the customized application of the WB guarantee instrument led potential investors in the Ghana bond to ponder the best way to value the instrument. This paper provides guidance on this subject by presenting four ways to assess the value of a World Bank guarantee for debt capital market issues. The methodologies presented are: nominal weighted average yield; rolling nominal weighted average yield; discounted cash flow; and recovery analysis. The paper presents the methodologies by applying them to a fictional bond issuance by the government of Emergistan, a fictional low income country. Background information on the country and bond issuance has been kept to the minimum as the sole purpose of this example is to illustrate the results of each of the methodologies. It should be noted that World Bank guarantees can be structured in a number of ways depending on the issuer’s objectives as well as country and market circumstances. For instance, guarantees could cover interest and/or principal payments of bonds. Coverage could be on a first loss or back-ended basis. Therefore, the most appropriate valuation method would depend on the specific features of the guarantee being considered. |
| Databáze: | OpenAIRE |
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