I understand why investors would care about the DV01 of their bonds, but why would a company care about the DV01 of their bonds? If the price of the bond were to change, that doesn't affect the company that issued it right? Since the company already got their money, and just needs to issue out the coupon payment.
| +379 | Evercore Intern Seizure | 56 | 1h |
| +74 | JPM M&A is Gone??? Purely Coverage Banking??? | 33 | 1h |
| +62 | Is DCM actually underrated ? | 26 | 23m |
| +53 | How do I understand vs. just memorizing? | 9 | 2h |
| +48 | Losing my personality in Banking | 9 | 1d |
| +47 | Are all Tech / TMT groups sweaty? | 38 | 1d |
| +42 | Associate & Above IB exits | 16 | 4d |
| +33 | Incoming IB Analyst: Best Ways to Prepare? | 11 | 8h |
| +27 | Which groups are ideal for laterals? | 12 | 1d |
| +24 | Thoughts on PEI Global Partners? | 4 | 2d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Not totally sure, but I would imagine it is because it would affect their cost of capital. So it might not necessarily matter for that issuance of bonds, but if the company wants to issue debt in the future and their current bonds are now perceived as riskier by the market, future issuances would require a higher interest rate (also increasing their cost of debt), which would have a tangible impact on their financials.
your initial instinct is correct..the corp issuer doesn't care about dv01
yeah haha literally no one within the company, not treasury not Corp Dev, will care about their DV01
this is not true
please. elaborate on how someone within a corporate would care about the DV01 on their bond issues. I’ve spent some time on corporate swaps desks and DCM desks putting together nice little pages on interest rate swaps, DV01s and IG refinancings...not one gave a crap about the DV01 on the swap they were entering into.
and I should add DV01 really is discussed more for swaps not actual bond issuances. not one doing a DCM deck did the term “DV01” make it in.
you’re the one posting the questions like this and other questions like why bonds are marked to market...I’m the one you should be listening to for real world input
I didn't ask if corporates cared, I asked why they care...and I'm clearly asking for a reason. Not going to disclose any more information.
So this is a real situation in which you’re working with a corporate that actually cares what the DV01 is on each of their bonds...so my response would be you should ask them or someone else on your team why they care. it shouldn’t be something for you to have to find out yourself. you’re not going to look stupid for asking the question. there’s not some blatant answer that you’re missing here. without more info, there’s nothing further to this. they. do. not. care. even if some poor treasury analyst is tasked to do some liability management exercise to figure out how their view on where rates are going will impact the trading prices of bonds they may or may not be planning to buy back in the open market...a DV01 is useless cuz convexity is going to in the way of extrapolating any meaningful rates shifts they’re hypothetically building into the LM model.
That's wat I was looking for. I just wanted to make sure there wasn't some blatant answer that I was missing. Thanks.
With that said, since bonds are marked to market on the balance sheet, wouldn't it be useful to understand DV01 to understand how your balance sheet might fluctuate?
Iusto autem aut impedit aliquam repudiandae itaque qui. Fuga exercitationem sint id facere earum. Ea tempora assumenda tempora voluptas. Qui sunt ea nostrum accusantium. Animi est illum nihil perspiciatis quos voluptatem deleniti odit. Praesentium et praesentium expedita et non beatae tempore molestiae.
Sit quae ipsam id accusamus quo. Sit voluptatem quia eum et aut. Fuga est omnis assumenda et.
Dolorem neque repellendus sed qui ut. Porro in cum molestiae. Enim neque eveniet dolorum deleniti dicta et. Aut quas dolor recusandae earum.
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...