Page 45 - FINAL CFA SLIDES DECEMBER 2018 DAY 15
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Session Unit 16:
55. Fundamentals of Credit Analysis
Company B has a lower secured debt
leverage ratio than Company A, while total
and net leverage ratios are about the same.
Company B is more attractive to unsecured
debt holders because it is less top heavy and
may have some capacity to borrow from
banks, which suggests a lower probability of
default.
tanties If it does default, Company B may have a
higher percentage of assets available to
unsecured debt holders than Company A,
especially if holders of convertible bonds
have exercised their options.
