Bond Valuation and Structuring

Optimum Bond Calling and Refunding

Interfaces (November 1979)

One of the earliest published explanations of the concept of efficiency in calling and refunding bonds, this paper explains how analytical techniques developed at Bell Labs and AT&T influenced the Bell System’s decisions to refund more than $2 billion of callable debt during 1976 and 1977.

Tax Differentials and Callable Bonds

Journal of Finance (September 1979)

When a borrower has a higher tax rate than the lender; on an after-tax basis both parties benefit from a callable bond compared with either a noncallable or putable one. Because corporations are taxable and major lenders such as pension funds are not, this explains the prevalence of callable corporate bonds and the rarity of putable bonds.
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