27-10-2015, 10:10 AM
Bonds is a loan to the company ( though the terms are always in their favour)and they will pay the interest as agreed. Payment comes from their cash flows or asset sales... and they will try their best to pay up, otherwise they will face tremendous difficulties in borrowing money from any source. This is sucide for any business.
Shares is owning part of the company, and there may or may not be dividends or capital appreciation. The company may make lots of profits but may not declare any dividends. But they will have to pay off their loans... such as bonds.
Buying shares AND bonds from the same company in my view may pose a higher risk. The purpose of either is very different... and both ( as in all investment decisions ) carries its own risk profiles.
Simplistically, there is a higher chance of your capital sum being returned from buying bonds.
Lets not bring inflation into the equation for short term bonds ( less than 4 years )
As for Oxley, my personal view is that its debt is very high.. ( almost similar to Swiber ). How they intend to service interest payments is difficult to determine. Although their assets are in properties, their value is based on market value.. which is often over the top... for the purpose of looking good.
To get a bank loan using your home ( or 2nd home ) as collateral, it will be advantages to have it valued as high as you can... no?
Shares is owning part of the company, and there may or may not be dividends or capital appreciation. The company may make lots of profits but may not declare any dividends. But they will have to pay off their loans... such as bonds.
Buying shares AND bonds from the same company in my view may pose a higher risk. The purpose of either is very different... and both ( as in all investment decisions ) carries its own risk profiles.
Simplistically, there is a higher chance of your capital sum being returned from buying bonds.
Lets not bring inflation into the equation for short term bonds ( less than 4 years )
As for Oxley, my personal view is that its debt is very high.. ( almost similar to Swiber ). How they intend to service interest payments is difficult to determine. Although their assets are in properties, their value is based on market value.. which is often over the top... for the purpose of looking good.
To get a bank loan using your home ( or 2nd home ) as collateral, it will be advantages to have it valued as high as you can... no?
