Debt ServiceDebt Service refers to the process by which a borrower repays the principal and interest of a debt according to the agreed schedule and amounts. Debt service includes regular interest payments and the repayment of the principal at maturity. For both businesses and individuals, the ability to service debt is a crucial indicator of financial health. Failure to meet debt service obligations on time can lead to default, a downgrade in credit rating, and even bankruptcy. Therefore, effectively managing debt service is essential for maintaining good financial standing.Debt ServiceDebt Service refers to the process by which a borrower repays the principal and interest of a debt according to the agreed schedule and amounts. Debt service includes regular interest payments and the repayment of the principal at maturity. For both businesses and individuals, the ability to service debt is a crucial indicator of financial health. Failure to meet debt service obligations on time can lead to default, a downgrade in credit rating, and even bankruptcy. Therefore, effectively managing debt service is essential for maintaining good financial standing.
Debt RatioThe term debt ratio refers to a financial ratio that measures the extent of a company’s leverage. The debt ratio is defined as the ratio of total debt to total assets, expressed as a decimal or percentage. It can be interpreted as the proportion of a company’s assets that are financed by debt. A ratio greater than 1 shows that a considerable amount of a company's assets are funded by debt, which means the company has more liabilities than assets. Debt RatioThe term debt ratio refers to a financial ratio that measures the extent of a company’s leverage. The debt ratio is defined as the ratio of total debt to total assets, expressed as a decimal or percentage. It can be interpreted as the proportion of a company’s assets that are financed by debt. A ratio greater than 1 shows that a considerable amount of a company's assets are funded by debt, which means the company has more liabilities than assets.
Bond DiscountBond Discount refers to a situation where the market price of a bond is lower than its face value. A bond discount typically occurs when the market interest rate is higher than the bond's coupon rate, causing investors to demand a higher yield, which in turn drives down the bond's market price. The bond discount is calculated by subtracting the bond's current market price from its face value. Investors who purchase discounted bonds can gain the difference between the face value and the purchase price when the bond matures, and this difference is considered as additional income.Bond DiscountBond Discount refers to a situation where the market price of a bond is lower than its face value. A bond discount typically occurs when the market interest rate is higher than the bond's coupon rate, causing investors to demand a higher yield, which in turn drives down the bond's market price. The bond discount is calculated by subtracting the bond's current market price from its face value. Investors who purchase discounted bonds can gain the difference between the face value and the purchase price when the bond matures, and this difference is considered as additional income.
Bond MarketThe bond market is often referred to as the debt market, fixed-income market, or credit market. It is the collective name given to all trades and issues of debt securities. Governments issue bonds to raise capital to pay debts or fund infrastructural improvements. Publicly traded companies issue bonds to finance business expansion projects or maintain ongoing operations.Bond MarketThe bond market is often referred to as the debt market, fixed-income market, or credit market. It is the collective name given to all trades and issues of debt securities. Governments issue bonds to raise capital to pay debts or fund infrastructural improvements. Publicly traded companies issue bonds to finance business expansion projects or maintain ongoing operations.
Bond CovenantBond Covenant refers to the legal agreements or clauses between the bond issuer and the bondholders. These clauses are designed to protect the interests of the bondholders by ensuring that the issuer makes timely payments of interest and principal. Bond covenants typically include a series of restrictive clauses and commitments, such as limiting the issuer's ability to incur additional debt, requiring the maintenance of certain financial ratios, restricting the sale of assets, and specifying default terms under certain conditions. If the issuer breaches these covenant terms, the bondholders may have the right to demand immediate repayment of the entire debt or take other legal actions.Bond CovenantBond Covenant refers to the legal agreements or clauses between the bond issuer and the bondholders. These clauses are designed to protect the interests of the bondholders by ensuring that the issuer makes timely payments of interest and principal. Bond covenants typically include a series of restrictive clauses and commitments, such as limiting the issuer's ability to incur additional debt, requiring the maintenance of certain financial ratios, restricting the sale of assets, and specifying default terms under certain conditions. If the issuer breaches these covenant terms, the bondholders may have the right to demand immediate repayment of the entire debt or take other legal actions.
Bond RatingBond Rating is a credit rating assigned by professional rating agencies to evaluate the credit quality and debt repayment ability of bond issuers. Bond ratings aim to help investors assess the credit risk of bonds, i.e., whether the issuer can make timely interest payments and repay the principal. Ratings are typically categorized into investment grade and speculative grade, with investment grade indicating lower credit risk and speculative grade indicating higher credit risk. Bonds with higher ratings generally offer lower interest rates due to lower credit risk, while bonds with lower ratings need to offer higher interest rates to attract investors.Bond RatingBond Rating is a credit rating assigned by professional rating agencies to evaluate the credit quality and debt repayment ability of bond issuers. Bond ratings aim to help investors assess the credit risk of bonds, i.e., whether the issuer can make timely interest payments and repay the principal. Ratings are typically categorized into investment grade and speculative grade, with investment grade indicating lower credit risk and speculative grade indicating higher credit risk. Bonds with higher ratings generally offer lower interest rates due to lower credit risk, while bonds with lower ratings need to offer higher interest rates to attract investors.
