Adjustment bond is a new security issued for the outstanding debt of a corporation facing bankruptcy that needs to recapitalize its debt structure.

After 114 Years, It's Payday; Patience Is Rewarded Meagerly as Inflation Erodes 1881 Bonds

Adjustment bond is a new security issued for the outstanding debt of a corporation facing bankruptcy that needs to recapitalize its debt structure. This issue allows for the consolidation of the debt obligation to the new bonds thus making adjustment bonds an alternative to bankruptcy if a company’s financial difficulties make it difficult to make debt payments. Adjustment bonds have a structure where interest payments happen only when the company has earnings, though there may be provisions for the accrual of missed payments. The company can reorganize its debts in a way that allows the company to continue its operations, increasing the chances that creditors will be paid more than if the company is liquidated. It also allows the company the chance to adjust terms such as interest rates and time to maturity giving the company a better opportunity to meet its commitments without entering bankruptcy.

Adjustment Bond

A chastity bond is a corporate bond that matures when triggered by an event, such as a hostile takeover, that raises the cost of the acquisition.

A chastity bond is a corporate bond that matures, at par, when triggered by an event, such as a hostile takeover, that raises the cost of the acquisition to the acquirer. Similar strategies involving common stock of the target company include poison pills, shareholder rights plans which enable existing shareholders to purchase additional shares of the target company at a discount, making the deal more expensive, or additional shares of acquiring company at a discount, diluting the value of the combined company after a completed acquisition. Chastity bonds are corporate bonds intended to dissuade hostile takeovers, based on the premise that if a large issue of these bonds mature and become payable upon completion of a takeover, the overall purchase price may become prohibitively expensive to the acquirer. A chastity bond is a corporate bond that matures, at par, when triggered by an event, such as a hostile takeover, that raises the cost of the acquisition to the acquirer. A chastity bond is a corporate bond that matures, at par, when triggered by an event, such as a hostile takeover, that raises the cost of the acquisition to the acquirer.

Chastity Bond

Corporate inflation-linked securities mitigate inflation risk by indexing the coupon rate to an inflationary gauge such as the consumer price index.

Corporate inflation-linked securities—also referred to as inflation-linked bonds or linkers—are fixed-income securities that have a coupon rate that adjusts on a monthly basis to the prevailing inflation rate. Corporate inflation-linked securities seek to mitigate the risks posed by inflation to a bond's rate of return by indexing the coupon rate to an inflationary gauge such as the consumer price index. Corporate inflation-linked securities are similar to government-issued Treasury inflation-protected securities (TIPS), whose bond principal also varies with inflation. Corporate inflation-linked securities are just like Treasury inflation-protected securities that are offered by the government and whose bond principal also varies with inflation.

Corporate Inflation-Linked Securities (CILS)

The Commercial Paper Funding Program (CPFF) was designed to increase the liquidity of the commercial paper market by providing funding to issuers.

Board announces creation of the Commercial Paper Funding Facility (CPFF) to help provide liquidity to term funding markets

Federal Reserve Board announces establishment of a Commercial Paper Funding Facility (CPFF) to support the flow of credit to households and businesses

The Evolution of a Financial Crisis: Panic in the Asset-Backed Commercial Paper Market

Commercial Paper Funding Facility 2020: Program Terms and Conditions

The Commercial Paper Funding Facility (CPFF) was a program established by the Federal Reserve to stabilize the commercial paper market during the 2008 financial crisis through the use of SPVs. The Commercial Paper Funding Facility was subsequently created by the Federal Reserve Bank of New York on Oct. 7, 2008, as a result of the credit crunch faced by financial intermediaries in the commercial paper market. The program specifically provided a backup measure of liquidity for commercial paper issuers via a special purpose vehicle (SPV).
The Fed again opened the CPFF in March of 2020 in response to the steep market selloff and economic uncertainty surrounding the start of the global COVID-19 pandemic. The SPVs created through the CPFF were financed directly by the Federal Reserve Bank of New York and were used to purchase three-month commercial paper, both secured and unsecured.

Commercial Paper Funding Facility (CPFF)

The Commercial Paper Funding Facility was created by the Federal Reserve Bank of New York in 2008 to increase liquidity in the commercial paper market.

The Commercial Paper Funding Facility (CPFF) is an institution created by the Federal Reserve Bank of New York on October 27, 2008, as a result of the credit crunch faced by financial intermediaries in the commercial paper market during the height of the financial crisis that gave way to the Great Recession. The Commercial Paper Funding Facility (CPFF) is an institution created by the Federal Reserve Bank of New York on October 27, 2008, as a result of the credit crunch faced by financial intermediaries in the commercial paper market during the height of the financial crisis that gave way to the Great Recession. At the time the CPFF was created, the commercial paper market was experiencing significant strain because investors, including money market mutual funds, were hesitant to purchase commercial paper, especially with longer-dated maturities, given that these investors were already struggling with liquidity pressures. The SPV used by the CPFF purchases and holds three-month unsecured commercial paper and asset-backed commercial paper at a discounted rate until maturity The Commercial Paper Funding Facility (CPFF) was a Federal Reserve-led response to support the commercial paper market as it floundered at the height of the 2008-09 financial crisis.

A debenture redemption reserve is a provision that states that any Indian company that issues debentures must create a debenture redemption service.

Companies (Share Capital and Debentures) Amendment Rules, 2019

Revision in the Rules on Creation of Debenture Redemption Reserve

A debenture redemption reserve (DRR) is a provision stating that any Indian corporation that issues debentures must create a debenture redemption service in an effort to protect investors from the possibility of a company defaulting. A debenture redemption reserve (DRR) is a provision stating that any Indian corporation that issues debentures must create a debenture redemption service in an effort to protect investors from the possibility of a company defaulting. And companies falling under the following four categories are altogether exempt from DRR requirements:
All India Financial Institutions (AIFIs) regulated by Reserve Bank of India (RBI)
Other financial institutions regulated by RBI
Banking companies for both public and privately-placed debentures
Housing finance companies registered with the National Housing Bank Therefore, to protect debenture holders from the risk of default by the issuing company, Section 117C of the Indian Companies Act of 1956 implemented the debenture redemption reserve (DRR) mandate. 1:23
A debenture redemption reserve (DRR) is a requirement imposed on Indian corporations that issue debentures.

Debenture Redemption Reserve (DRR)

Debt exchangeable for common stock (DECS) is a convertible security allowing an investor to convert debt into common stock.

Debt exchangeable for common stock (DECS) is a debt instrument that provides the holder with coupon payments in addition to an embedded short put option and a long call on the issuing company's stock. Preferred redeemable increased dividend equity securities (PRIDES) are one example of debt exchangeable for common stock and are synthetic securities consisting of a forward contract to purchase the issuer's underlying security and an interest-bearing deposit for a specific price. Debt exchangeable for common stock (DECS) is a debt instrument that provides the holder with coupon payments in addition to an embedded short put option and a long call on the issuing company's stock. Debt exchangeable for common stock (DECS) instruments provide the holder with the right to convert the security into the underlying company's common stock. To cut interest costs and make the debt offering more attractive (marketable), this security can be packaged with an added option to convert the debt into common stock.

Debt Exchangeable for Common Stock (DECS)

A dirty price is a bond pricing quote that includes the cost of a bond that as well as accrued interest.

A dirty price is a bond pricing quote, which refers to the cost of a bond that includes accrued interest based on the coupon rate. The dirty price is typically quoted between brokers and investors, but the clean price or the price without accrued interest is usually considered the published price. In short, a dirty bond price includes accrued interest while a clean bond price does not. On the day of the coupon payment, the clean price and dirty price are equal since there is no accrued interest until the next market day. The dirty price allows a seller to calculate the actual cost of a bond since the bond might have accrued interest from the previous coupon payment date.

Dirty Price

Doomsday call is a provision which allows the issuer to hedge against interest rate risk by redeeming the bond prior to maturity.

A doomsday call is a provision which allows the issuer to hedge against interest rate risk by redeeming the bond (paying back the principal and accrued interest) prior to maturity. When exercised, a doomsday call can reduce the yield of a bond because it shortens the bond's term (the amount of time between bond issuance and maturity) and therefore decrease the overall interest paid. A doomsday call is a provision which allows the issuer to hedge against interest rate risk by redeeming the bond (paying back the principal and accrued interest) prior to maturity. A doomsday call is a provision which allows the issuer to hedge against interest rate risk by redeeming the bond (paying back the principal and accrued interest) prior to maturity. It is relatively uncommon for a bond issuer to invoke a doomsday call, as it is generally to the issuer's advantage to allow the bond to continue to maturity.

Doomsday Call

Fine paper refers to high grade securities whose credit rating makes them almost risk free with an extremely low probability of default.

Commercial Paper Rates and Outstanding Summary

Fine paper can refer to high-grade securities whose credit rating makes them almost risk-free or to commercial paper issued by blue-chip companies with a low probability of default. Fine paper can refer to high-grade securities whose credit rating makes them almost risk-free, or to commercial paper issued by blue-chip companies with a low probability of default. The paper is offered at a discount and the borrower receives the face value of the paper upon maturity, as commercial paper doesn't usually offer set interest payments. Fine paper is commercial paper, which is short-term debt that companies issue to raise money for specific projects.

Fine Paper

A fixed-rate capital security (FRCS) is issued by a corporation that has a $25 par value and offers investors a combination of the features of corporate bonds and preferred stock.

A fixed-rate capital security (FRCS) is a security issued by a corporation that has a $25 par value (although some are issued with a $1,000 par value) and offers investors a combination of the features of corporate bonds and preferred stock. These securities provide the benefits of attractive yields:
Fixed monthly, quarterly, or semiannual income
Investment time frames that are generally predictable (20-49 years, though some are perpetual)
Investment-grade credit quality (in most cases)
Fixed-rate capital securities (FRCS) are hybrid securities issued by some corporations that combine features of corporate bonds and preferred shares. A fixed-rate capital security (FRCS) is a security issued by a corporation that has a $25 par value (although some are issued with a $1,000 par value) and offers investors a combination of the features of corporate bonds and preferred stock. The interest deferral option on FRCS places the security at a higher risk than preferred stock or corporate bonds and, thus, offers a higher yield to investors. Unlike common and preferred stock dividends, the distributions made on fixed-rate capital securities are fully tax-deductible for the issuer, which is similar to how the interest payments on traditional debt instruments are treated.

Fixed-Rate Capital Securities

Performance Index Paper (PIP) is short-term debt security where the interest rate payment is in a currency whose value is linked to another currency.

70 Years Connecting Capital Markets to Development: Chapter 4: Pioneering Swaps

Performance Index Paper (PIP) is short-term commercial paper where the interest rate is denominated and paid in a currency whose value varies with the value of another currency. A cross currency swap, also called a currency coupon swap or a combined interest rate and currency swap (CIRCUS), has one side that is a fixed rate payment and the other is a floating rate payment. Performance Index Paper (PIP) is short-term commercial paper where the interest rate is denominated and paid in a currency whose value varies with the value of another currency. Performance Index Paper (PIP) is short-term commercial paper where the interest rate is denominated and paid in a currency whose value varies with the value of another currency. In these swaps, a loan denominated in one currency and booked at a fixed rate typically is swapped for a floating rate loan denominated in another currency.

Performance Index Paper (PIP)

A retail note is a debt obligation issued by a corporation that is unsecured and issued in increments of $1,000.

A retail note is a debt obligation issued by a corporation. This added yield premium makes retail notes more attractive than regular bonds, particularly for investors who are not concerned with a loss of income when a retail note is called. When the original owner of the retail note passes away, the survivor option permits the beneficiaries of the retail note to sell the note back to the issuer at par. Investors of retail notes receive fixed interest payments until the notes mature or are called away. If the notes are callable, the payments will continue until they are called away.
Due to the subordinate nature of retail notes, they may not work for every investor.

Retail Note

Telephone bonds are debt securities issued by early telephone companies to raise funds for capital expenditures.

Telephone bonds are debt securities, so named because they were issued by early telephone companies to raise funds for capital expenditures. The faster wireless technology evolves, the faster companies must spend to upgrade networks in an attempt to stay ahead of competitors.
Today, telephone bonds represent a riskier investment, though investors interested in purchasing telecommunications bonds have many more options from which to choose than they did in the early days of AT&T.
The sense of telephone bonds as boring, safe investments grew out of the telephone network’s position as a quasi-public utility. Prior to 1984 telephone bonds promised a safe, steady income since the companies issuing them were monopolies whose revenue stream, traditional landline phone service subscriptions and long-distance charges, did not face competitive disruption. Telephone bonds promised a safe, steady income since the companies issuing them were monopolies whose revenue stream, traditional landline phone service subscriptions and long-distance charges, did not face competitive disruption. Telephone bonds are debt securities, so named because they were issued by early telephone companies to raise funds for capital expenditures.

Telephone Bond

Yellow sheets are bulletins that provide bond traders with updated information, such as bid and ask prices, about corporate bonds. 

Yellow sheets are bulletins for bond traders which contain information for corporate bonds listed on the over-the-counter (OTC) market. Some well-established foreign companies list in the U.S. through the over-the-counter markets, often as American Depositary Receipts (ADRs).
The bid-ask spread is, understandably, wider for bonds listed on yellow sheets to compensate investors for the risks involved in these entities.
The main risk is that the company will fail and default on the bonds. Yellow sheets are bulletins for bond traders which contain information for corporate bonds listed on the over-the-counter (OTC) market. Yellow sheets and pink sheets are now electronic services published by OTC Markets Group. The companies issuing these bonds are not listed on any public U.S. stock exchange and therefore are not subject to the stringent government regulation and publication requirements of listed public companies.

Corporate Bonds

More in Investing

Terms in Corporate Bonds

Adjustment Bond

Chastity Bond

Corporate Inflation-Linked Securities (CILS)

Commercial Paper Funding Facility (CPFF)

Commercial Paper Funding Facility (CPFF)

Debenture Redemption Reserve (DRR)

Debt Exchangeable for Common Stock (DECS)

Dirty Price

Doomsday Call

Fine Paper