Corporate Bonds Quotes

“A credit default swap was confusing mainly because it wasn’t really a swap at all. It was an insurance policy, typically on a corporate bond, with semiannual premium payments and a fixed term. For instance, you might pay $200,000 a year to buy a ten-year credit default swap on $100 million in General Electric bonds. The most you could lose was $2 million: $200,000 a year for ten years. The most you could make was $100 million, if General Electric defaulted on its debt any time in the next ten years and bondholders recovered nothing. It was a zero-sum bet: If you made $100 million, the guy who had sold you the credit default swap lost $100 million. It was also an asymmetric bet, like laying down money on a number in roulette. The most you could lose were the chips you put on the table; but if your number came up you made thirty, forty, even fifty times your money.”
― Michael Lewis, The Big Short: Inside the Doomsday Machine

“Lenders often consider a company's industry, market conditions, and competitive landscape in their risk assessment. Everything matters.”
― Hendrith Vanlon Smith Jr.

“Interest coverage ratio measures a company's ability to pay interest on its outstanding debt. If a company can’t effectively pay interest on its outstanding debt, the likelihood that it can afford new debt is extremely low.”
― Hendrith Vanlon Smith Jr.

“Mezzanine financing combines debt and equity, providing lenders with additional security. If your lender is interested in doing this, just know that’s it’s a way for them to mitigate risk. On the flip side, it may sometimes be smart to come out the gate with this as your offering.”
― Hendrith Vanlon Smith Jr.

“Loan amortization schedules outline how loan payments are allocated between principal and interest. These can make the difference between pays as agreed or default at some future point in time.”
― Hendrith Vanlon Smith Jr.

“Working capital loans help businesses manage day-to-day operational expenses. But it’s really important that cash flow optimization is prioritized in this.”
― Hendrith Vanlon Smith Jr.

“Regulatory compliance is crucial in corporate lending, with financial institutions having to adhere to various laws and guidelines. It represents another set of costs and risks that lenders have to consider.”
― Hendrith Vanlon Smith Jr.

“Commercial lending is a vital component of the financial industry, supporting businesses in achieving their growth and operational goals. Without corporate lenders, the ability and rate at which businesses are able to grow would likely be considerably less.”
― Hendrith Vanlon Smith Jr.

“Commercial bankers have a responsibility to holistically evaluate the creditworthiness of businesses seeking loans to ensure responsible lending practices.”
― Hendrith Vanlon Smith Jr.

“Understanding the unique needs of each business is crucial in tailoring financial solutions that align with their objectives. It’s never a one size fits all when it comes to financing.”
― Hendrith Vanlon Smith Jr.

“Interest rate risk management tools, like derivatives, may be utilized to mitigate the impact of fluctuating interest rates on commercial loans.”
― Hendrith Vanlon Smith Jr.

“Loan restructuring may be explored as a collaborative solution between commercial bankers and businesses facing financial challenges. In the event of crises, it may be the best option for everyone.”
― Hendrith Vanlon Smith Jr.

“Refinancing options are considered to optimize a business's financial structure, potentially lowering interest costs and improving overall financial health. But it has to be to the advantage of both the borrower and the lender.”
― Hendrith Vanlon Smith Jr.

“There will always be opportunities at the intersection of risk and predictability.”
― Hendrith Vanlon Smith Jr.

“Municipal bonds finance local government projects, such as schools, roads, and utilities. So there’s a public good aspect to investing in municipalities that isn’t antithetical to equity investing but it’s different.”
― Hendrith Vanlon Smith Jr.

“Bond proceeds contribute to community improvements, enhancing residents' quality of life. Theres a public good aspect there.”
― Hendrith Vanlon Smith Jr.

“Credit risk is a major concern in business lending, and lenders use credit scoring models specific to businesses. As an entrepreneur, you need to have a clear credit and distinct strategy for your business’s credit.”
― Hendrith Vanlon Smith Jr.

“Revolving credit lines allow businesses to borrow, repay, and re-borrow within a specified limit. In terms of managing a business’s cash flow, utilizing revolving credit lines may be a great way to go.”
― Hendrith Vanlon Smith Jr.

“Cash flow analysis helps lenders assess a business's ability to generate sufficient cash to meet debt obligations. In terms of managing your business’s money, free cash flow is a good metric to keep front and center.”
― Hendrith Vanlon Smith Jr.

“Secured loans have collateral, while unsecured loans rely solely on a borrower's creditworthiness. As an entrepreneur, you’re in a stronger position if you have both the creditworthiness piece and the collateral piece.”
― Hendrith Vanlon Smith Jr.

“Bridge loans provide short-term financing until long-term financing is secured. If you’re having trouble getting full financing, try seeking a bridge loan for the time being.”
― Hendrith Vanlon Smith Jr.

“Defaulting on a corporate loan can result in financial penalties and damage the business’s credit. You wanna avoid default by any moral means necessary.”
― Hendrith Vanlon Smith Jr.

“Refinancing involves replacing an existing loan with a new one, often to secure better terms. But it’s a bit of a paradox because to benefit from what may be much needed refinancing, you need to qualify for refinancing.”
― Hendrith Vanlon Smith Jr.

“Interest rate risk arises when there's potential for interest rates to change, impacting loan costs. It’s a serious consideration for lenders.”
― Hendrith Vanlon Smith Jr., Capital Acquisition: Small Business Considerations for How to Get Financing

“Restructuring may occur if a business faces financial challenges, involving changes to loan terms. It can be a tedious process, but often times, better than the alternatives.”
― Hendrith Vanlon Smith Jr.

“Currency risk is a consideration in international corporate lending, given fluctuating exchange rates. It represents another set of costs and risks that lenders have to consider when lending internationally.”
― Hendrith Vanlon Smith Jr., Capital Acquisition: Small Business Considerations for How to Get Financing

“Corporate lenders play a vital role in supporting economic growth by providing capital to businesses. Without corporate lenders, the ability and rate at which businesses are able to grow would likely be considerably less.”
― Hendrith Vanlon Smith Jr., Capital Acquisition: Small Business Considerations for How to Get Financing

“Commercial loans serve various purposes, from financing expansion and working capital to equipment acquisition and real estate investment – They’re a very important part of the capital ecosystem of the world, and of its individual nations.”
― Hendrith Vanlon Smith Jr.

“Municipal bonds finance local government projects, such as schools, roads, and utilities.”
― Hendrith Vanlon Smith Jr.

“The bond market plays a pivotal role in the global economy. It provides a vital source of capital for governments and corporations, enabling them to fund infrastructure projects, expand operations, and pursue innovation. Bond yields also serve as benchmarks for other interest rates, influencing borrowing costs for businesses and consumers alike.”
― Hendrith Vanlon Smith Jr., Bond ing: The Power of Investing in Bonds