Optimal Debt Exchange Offers
AbstractThis paper examines the pricing and efficiency implications of debt exchange offers. The continuous-time model employed yields simple asset pricing formulae as well as closed-form solutions for the parameters characterising optimal debt exchanges offers. Polar cases are examined in which the debt is either held by a single bank or by many bond-holders, that is respectively private or public debt. A comparative analysis of the efficiency properties of each form of debt yields the interesting finding that under the often criticised exit-consent provision, optimal public debt exchange offers are ex-ante the most efficient.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 1995022.
Date of creation: 01 May 1995
Date of revision:
exchange offers; corporate bonds; agency costs;
Find related papers by JEL classification:
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
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- Jianjun Miao, 2005.
"Optimal Capital Structure and Industry Dynamics,"
Journal of Finance,
American Finance Association, vol. 60(6), pages 2621-2659, December.
- Anderson, Ronald W. & Sundaresan, Suresh & Tychon, Pierre, 1996. "Strategic analysis of contingent claims," European Economic Review, Elsevier, vol. 40(3-5), pages 871-881, April.
- Anderson, Ronald W. & Tu, Cheng, 1996. "Numerical analysis of strategic contingent claims models," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1997004, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 00 Jan 1997.
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