ZGBs provide financing with a money-back guarantee

Article Abstract:

Zero guaranty bonds (ZGBs) are more costly than other, less secure modes of financing, but are beneficial for firms unable to get cheaper financing and for start-up firms without private placement investors. Companies experiencing difficulty in establishing credit ratings are beginning to use ZGBs to attract conservative investors and guarantee bank loans. ZGBs are not cost-effective for loans of less than $1 million. ZGBs mature from 3 to 15 years following issue, are obtainable in $5,000 denominations, are liquid assets (and can therefore be assigned to others), and may have interest taxation calculated based on either yearly dividends or dividend pay-out upon maturity. Investors in ZGBs have purchased an interest in the ZGB issuer, through the related stock warrants issued during ZGB transactions.

Innovations, Bonds, Bonds (Securities), Zero coupon securities

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Make receivables work harder: sell them

Article Abstract:

The sale of receivable accounts to banks provides a corporation with reasonably priced cash or a credit line on a regular basis. This kind of financing is an off-balance sheet method and is not a loan. Collection of the receivables remains with the corporation in contrast to factoring. The minimum practical size of the receivable accounts is in the range of $5 - $10 million, but large and middle-market firms can negotiate short- or long-term agreements. A company's credit rating and the quality of the receivable accounts determine the interest on the cash advance. The complex structure of contracts for receivables financing is further complicated by securities laws regulating investment banks.

DEPOSITORY INSTITUTIONS, Banking industry, Services, Accounts receivable

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Capital ideas: revolving payment plan provides fixed-rate corporate financing

Article Abstract:

Revolving credit is a financial tool that can now be used by corporations too. A case study of the use of revolving credit by PHH Group Inc. of Hunt Valley, Maryland shows how the corporation put together a $1 billion revolving line of credit, with the help of 25 banking institutions across the country. PHH, a fleet manager of automobiles and air planes, leases products and services to its clients; therefore, acquiring fixed-rate monthly loans from banks seemed mutually advantageous to the banks and the corporation.

Methods, Business enterprises, Cash management, Loans, Credit management, column, Revolving funds, PHH Group Inc.

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