https://www.bondvigilantes.com/blog/2014/05/13/respect-seniors-txu-default-case-study/
2014.April
Energy Future Holdings Corp (formerly known as TXU) filed for Chapter 11 bankruptcy, listing $49.7bn in debt liabilities
"eye-opener" ---
the huge range of recovery values on the various 'tranches' of debt issued by the business.
due to --
the inherent complexity of the company’s capital structure :
The company had 14 separate major bond issues,
issued out of a range of different entities
with differing claims on the company’s various assets
""" ...
This great diversity of debt and different legal entities in the capital structure has meant similar differentiation in recovery values for the bonds. Below are some of the trading levels we currently see in the market for the more liquid bonds.
At one end of the extreme, the TXU 11.75% 2022’s are currently trading at 119.5% of face value whilst the TXU 10.5% 2016’s languish at 8.8 cents in the dollar.
*** The difference in price reflects the bonds’
'relative position in the queue of claims' for the company’s assets.
The difference of experience in terms of total returns from these bonds is also stark. Holders of the 11.75% 2022 bonds enjoyed a capital return of c 20% over the past two years (on top of the 11.75% coupon each year), whereas holders of the 10.25% 2015 bonds have been hit with a capital loss of c.70%.
..."""
-->
"""...
... seniority and position in a capital structure has a major impact when determining potential downside for high yield investors.
Indeed this factor can often be more important in the event of a default than the quality and credit worthiness
...
... the TXU bankruptcy is one of the echoes of the last LBO frenzy of 2006 and 2007, we believe that where you invest in the capital structure will also be important going forward.
When default rates do eventually rise from their currently low levels,
investing in bonds that 'rank senior in a capital' structure will be one way
to limit the potential downside of a high yield portfolio.
..."""
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2015年10月30日 星期五
corp. bond
corporate bonds default:
//=== http://learnbonds.com/3771/bond-default/
*** There is no timeline as to when bondholders will receive payment
as it all depends on the speed of asset disposal and
whether any funds remain after creditors have been paid.
*** Its not unusual for the process to take from 1 to 3 years before the last payment is distributed.
"""...
corporate bonds default on a regular basis. When a company defaults, the government is under no
obligation and is unlikely to rescue the company.
Typically, companies file for bankruptcy protection prior to a bond default. If a company defaults without declaring bankruptcy first, then creditors are likely to force them into bankruptcy. US companies can file for bankruptcy either under Chapter 7 or Chapter 11.
...
//=== Bond Defaults and Chapter 7 bankruptcy
Under Chapter 7 bankruptcy, the company ceases operations and goes out of business.
The courts will have to first determine
that reorganization and recovery is neither realistic nor worthwhile.
The court then appoints a trustee whose core responsibility will be
to liquidate all company assets and ensure the proceeds are used to pay outstanding claims.
There is a predetermined pecking order through which outstanding claims are paid:
First are the secured creditors and holders of senior debt,
Next are the ordinary bondholders
Equity shareholders are the last in line
Since a chapter 7 bankruptcy inevitably implies the sale of company assets, there is
a stark difference between a company with hard assets and one with intellectual capital in the form of employees.
Hard assets can be sold –
great employees, no matter how good, cannot be sold and are an intangible ‘asset’.
//=== Chapter 11 bankruptcy
Under Chapter 11,
corporate bondholders no longer receive principal and interest payments just like the shareholders will no longer receive a divided. ???
The reorganization plan outlines the creditor’s rights, and what they can expect to get once the reorganization is complete.
??? Bondholders may be issued with new stock or a combination of stocks and bonds in the restructured corporation in exchange for their bonds.
*** The new securities are often fewer and are of lower value than the defaulted bond.
"""...
Chapter 11 bankruptcy is more widespread, as well as being costly and complex.
In a nutshell, Chapter 11 bankruptcy allows the business
to continue operating shielded from recovery actions from its creditors.
All major business decisions must however obtain approval from the bankruptcy court. The company is reorganized in order to return to profit and normalcy in operations.
//=== vultures, carcass
"""... Most investors will not buy the debt of bankrupt companies.
Specialists called distressed debt traders, nicknamed “vultures”
because they pick on the 'carcasses' of dead companies, will determine the value of debt
..."""
http://learnbonds.com/3771/bond-default/
//=== http://learnbonds.com/3771/bond-default/
*** There is no timeline as to when bondholders will receive payment
as it all depends on the speed of asset disposal and
whether any funds remain after creditors have been paid.
*** Its not unusual for the process to take from 1 to 3 years before the last payment is distributed.
"""...
corporate bonds default on a regular basis. When a company defaults, the government is under no
obligation and is unlikely to rescue the company.
Typically, companies file for bankruptcy protection prior to a bond default. If a company defaults without declaring bankruptcy first, then creditors are likely to force them into bankruptcy. US companies can file for bankruptcy either under Chapter 7 or Chapter 11.
...
//=== Bond Defaults and Chapter 7 bankruptcy
Under Chapter 7 bankruptcy, the company ceases operations and goes out of business.
The courts will have to first determine
that reorganization and recovery is neither realistic nor worthwhile.
The court then appoints a trustee whose core responsibility will be
to liquidate all company assets and ensure the proceeds are used to pay outstanding claims.
There is a predetermined pecking order through which outstanding claims are paid:
First are the secured creditors and holders of senior debt,
Next are the ordinary bondholders
Equity shareholders are the last in line
Since a chapter 7 bankruptcy inevitably implies the sale of company assets, there is
a stark difference between a company with hard assets and one with intellectual capital in the form of employees.
Hard assets can be sold –
great employees, no matter how good, cannot be sold and are an intangible ‘asset’.
//=== Chapter 11 bankruptcy
Under Chapter 11,
corporate bondholders no longer receive principal and interest payments just like the shareholders will no longer receive a divided. ???
The reorganization plan outlines the creditor’s rights, and what they can expect to get once the reorganization is complete.
??? Bondholders may be issued with new stock or a combination of stocks and bonds in the restructured corporation in exchange for their bonds.
*** The new securities are often fewer and are of lower value than the defaulted bond.
"""...
Chapter 11 bankruptcy is more widespread, as well as being costly and complex.
In a nutshell, Chapter 11 bankruptcy allows the business
to continue operating shielded from recovery actions from its creditors.
All major business decisions must however obtain approval from the bankruptcy court. The company is reorganized in order to return to profit and normalcy in operations.
//=== vultures, carcass
"""... Most investors will not buy the debt of bankrupt companies.
Specialists called distressed debt traders, nicknamed “vultures”
because they pick on the 'carcasses' of dead companies, will determine the value of debt
..."""
http://learnbonds.com/3771/bond-default/
2015.10.29 資源回收, 鐵罐每公斤NT$1元
2015.10.29
資源回收, 鐵罐每公斤NT$1元,
2015/10/30 09:09 時報資訊
《商情》黃金、基本金屬全挫；原油續漲；BDI續疲；穀物多揚
"""...
貴金期貨-
預期升息因素，周四紐約期金重挫；
受美聯儲表示，12月決策會議上，恐進一步討論升息事宜，
使投資人認為升息機率大增，亦抑制金價走勢
..."""
商品行情網
http://cip.chinatimes.com/
原物料商品行情
http://www.stockq.org/market/commodity.php
資源回收, 鐵罐每公斤NT$1元,
2015/10/30 09:09 時報資訊
《商情》黃金、基本金屬全挫；原油續漲；BDI續疲；穀物多揚
"""...
貴金期貨-
預期升息因素，周四紐約期金重挫；
受美聯儲表示，12月決策會議上，恐進一步討論升息事宜，
使投資人認為升息機率大增，亦抑制金價走勢
..."""
商品行情網
http://cip.chinatimes.com/
原物料商品行情
http://www.stockq.org/market/commodity.php
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