Issue Of Debentures
Lifecycle
The issue of Debentures is done as per Rule 2 of Companies (Acceptance of Deposit) Rules, 2014. The specific type of Debenture issues include – Compulsorily Redeemable, Compulsorily Convertible, Optionally Convertible, Irredeemable, Allied Shareholders Agreements, and Secured Debentures.
Convertible Instruments are a blend of equity and debt components. Typically, such investment is made to avoid short term losses and participate in long term ownership. Its nature — optional or compulsory – adds complexity. Often, side agreements between promoters of company and Investors impact valuation and classification of debenture agreements. Key valuation challenges include valuation of American put option of conversion, estimation of the share price of a private company, dissecting debt and equity component.
Issue Of Debentures
Lifecycle
The issue of Debentures is done as per Rule 2 of Companies (Acceptance of Deposit) Rules, 2014. The specific type of Debenture issues include – Compulsorily Redeemable, Compulsorily Convertible, Optionally Convertible, Irredeemable, Allied Shareholders Agreements, and Secured Debentures.
Convertible Instruments are a blend of equity and debt components. Typically, such investment is made to avoid short term losses and participate in long term ownership. Its nature — optional or compulsory – adds complexity. Often, side agreements between promoters of company and Investors impact valuation and classification of debenture agreements. Key valuation challenges include valuation of American put option of conversion, estimation of the share price of a private company, dissecting debt and equity component.
Fixed Income Securities
- Secured Security & Debenture Trust Deed
- Side Agreements with Investors
- Fixed Rate Vs. Floating Rate Bonds
- Zero Coupon Bonds
- Inflation Linked Bonds
Characteristics
- Compulsorily Redeemable
- Compulsorily Convertible
- Optionally Convertible
- Irredeemable
- Allied Shareholders Agreement
Have more questions?
Identification of hidden or embedded derivatives
Identification of Credit Risk
Valuation Complexities
Calculation of Company Specific Risk Premium
Separation of Market Risk & Credit Risk
Estimation of Expected Credit Loss
Valuation Complexities
High growth potential
No revenues and operating losses
Uncertain call future potential
Primary asset = IP
Expected ESOP
Negative bottom line
Private entity (non-comparable listed entities)
How can we help you?
Building Credit Risk Matrix in comparison with global peers
Scenario Based Modelling for confidence level in recovery rate
Access to Global Interest Curves
Experience of valuing Corporate Bonds worth $1300 million (INR 10,000 Crore)
Dissecting Debt & Equity Components
How can we help you?
Building Credit Risk Matrix in comparison with global peers
Access to Global Interest Curves
Dissecting Debt & Equity Components
Scenario Based Modelling for confidence level in recovery rate