Help with capital structure arb analysis
To anyone with a public HY credit background or aware of this particular issue.
I’ve got capital structure arbitrage idea (highly leveraged co. but bonds seem to be holding up even though the stock is down about 50% yoy) and I’m upto speed on the business but was wondering how you would do the following:
i) Determine where each loan/bonds sits in the corporate structure and concisely breakdown the cross guarantees and security pledges?
ii) Given the leveraged nature of the company with different tranches of debt. What would your approach be to debt pay downs and cashflow analysis.
iii) Any general advice on your approach to capital structure arb analysis, especially if your trying to get an informed view quickly.
My goal is to come up with a long/short view on both the equity and different tranches of the debt for the best risk/reward opportunity. Any help is welcomed, thanks!
Ah, diving into the jungle of capital structure arbitrage, are we? Let's swing through the vines of this complex financial landscape!
i) To determine where each loan or bond sits in the corporate structure and understand the cross guarantees and security pledges, you'll want to:
ii) For debt paydowns and cash flow analysis:
iii) General advice for capital structure arbitrage analysis:
Remember, the goal is to find the sweet spot in the capital structure where the risk/reward ratio looks the most appealing. It's like finding the ripest bananas on the tree – they're not too high to reach, not too low to be snatched away, just right for the picking. Good luck with your arb adventure!
Sources: https://www.wallstreetoasis.com/forum/investment-banking/how-to-prepare-for-restructuring-technical-questions?customgpt=1, How to Prepare for Restructuring Technical Questions, Why You Should Consider Restructuring – Common Misconceptions/Insight on RX Groups
Ah, diving into the jungle of capital structure arbitrage, are we? Let's swing through the vines of this complex financial landscape!
i) To determine where each loan or bond sits in the corporate structure and understand the cross guarantees and security pledges, you'll want to:
ii) For a leveraged company with various debt tranches, your approach to debt paydowns and cash flow analysis should include:
iii) General advice for capital structure arbitrage analysis:
Remember, the goal is to identify mispricings between the equity and debt tranches for the best risk/reward opportunity. It's a bit like finding the ripest bananas in the bunch – it requires a keen eye and a good understanding of the tree's structure. Good luck!
Sources: https://www.wallstreetoasis.com/forum/investment-banking/how-to-prepare-for-restructuring-technical-questions?customgpt=1, How to Prepare for Restructuring Technical Questions, Why You Should Consider Restructuring – Common Misconceptions/Insight on RX Groups
Praesentium ipsam maiores tempora. Nemo inventore nostrum autem sit enim dicta similique doloribus. Quae deserunt praesentium nulla incidunt.
Aut eos explicabo esse exercitationem accusantium sunt. In autem omnis qui et eveniet perspiciatis.
Explicabo praesentium dolore explicabo officiis quia. Consectetur dolore amet quo. Tenetur ut ut non aut molestiae et voluptatem.
Iure aperiam labore eos. Qui quasi eum ea nisi atque ut. Consequatur necessitatibus error sequi soluta animi hic. Voluptatem in culpa dolore ratione eum veniam.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...