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Tag Archive: Unsecured debt


All valuation classes teach the equity market correlation method so it would be interesting to hear your views. Equity exists in many forms. In imagessecuritization, equity is the tranche that takes the first loss and controls the deal. In a mutual insurer/bank/thrift, etc., the book equity is held by the dividend-receiving policyholders. The real equity is held by management, who actually control the place, because the dividend-receiving policyholders will not vote them out. In a credit tenant lease, there is the guy that owns the property, and typically he puts up a teensy amount of equity, because there is a “credit tenant,” one that has an investment grade rating, and the mortgage is secured by:

  • the property
  • the senior unsecured credit of the “credit tenant,” whose lease payments pay the mortgage, and go directly to the lender, and
  • the equity owner.  Continue reading
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Asset Pricing

Lets revisit an article I published a couple of months back  as we know all valuation classes teach the equity market correlation method soimages it would be interesting to hear your views.

Equity exists in many forms. In securitization, equity is the tranche that takes the first loss and controls the deal. In a mutual insurer/bank/thrift, etc., the book equity is held by the dividend-receiving policyholders. The real equity is held by management, who actually control the place, because the dividend-receiving policyholders will not vote them out. In a credit tenant lease, there is the guy that owns the property, and typically he puts up a teensy amount of equity, because there is a “credit tenant,” one that has an investment grade rating, and the mortgage is secured by:

the property
the senior unsecured credit of the “credit tenant,” whose lease payments pay the mortgage, and go directly to the lender, and
the equity owner. Continue reading

Debt Vs Leverage

Generally, companies have two options when they wish to raise money. They can issue shares of stock, which are also

Leverage title screen

known as equities. Alternatively, they can issue bonds, which are also known as debt instruments. Leverage ratios tell investors how much debt a company has outstanding relative to the equity in their capital structure. I will write the above soon, lets discuss about Leverage and debt now.

Recently Sen. Rob Portman (R-Ohio) with Politico said, “Let’s use the debt limit, yes, as leverage.” As a practical matter, what he meant was, congressional Republicans should threaten to hurt Americans on purpose unless President Obama agrees to slash public investments. Because the White House won’t want such a catastrophe, Republicans will have “leverage” that Portman wants to see his party “use.”

In the finance world, debt and leverage are used interchangeably. Continue reading

Theory of Asset Pricing

All valuation classes teach the equity market correlation method so it would be interesting to hear your views.images

Equity exists in many forms. In securitization, equity is the tranche that takes the first loss and controls the deal. In a mutual insurer/bank/thrift, etc., the book equity is held by the dividend-receiving policyholders. The real equity is held by management, who actually control the place, because the dividend-receiving policyholders will not vote them out. In a credit tenant lease, there is the guy that owns the property, and typically he puts up a teensy amount of equity, because there is a “credit tenant,” one that has an investment grade rating, and the mortgage is secured by: Continue reading

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