Consider the following scenarios where a company wishes to raise funds. In each case suggest what fixed incomes securities they could use to best meet their needs, and where they might issue them. Consider specific product details and the benefits they would bring to the company and/or their investors.
1. The company is a technology firm that believes it has ‘cracked’ autonomous vehicles. Having only IPO’d two years ago, the company is still some time from selling its first car, with testing, licensing and regulatory hurdles to clear. Competition is fierce, but a successful launch will impact their expected cash flows and share price.
2. The company is a large, established insurance firm. Due to an unexpectedly bad winter and high levels of claims, they have found themselves short of liquid assets. They anticipate recovering the shortfall from normal business operations over the next 6 months.
3. The company is a international firm that operates a chain of coffee shops. While headquartered in Switzerland, most of its revenues are generated elsewhere. The company anticipates, but is not certain, of receiving a windfall, in 2 years time when it plans to sell its coffee production and processing business.