Common and Preferred Equity need to get whacked hard, and
subordinated debt needs to take a haircut.
Not exact matches
To start, he
needed both people and funds — futuristic home doodads don't invent themselves — so he secured $ 12.5 million in
subordinated debt financing from the Business Development Bank of Canada and Quebec's Fonds de solidarité FTQ, with flexible five - year payment terms (the latter a reward for years of solid financial management).
GolfTEC's Assell used a lesser - known option,
subordinated debt, which enables business owners to retain more ownership of their company while still receiving the capital they
need.
Here's a wild thought: we
need the same thing on a broader and more complex scale, allocating the embedded losses in our financial system to their rightful recipients, wiping out common, preferred equity, and
subordinated debt as
needed, and forcing the conversion of
debt claims to equity, delevering the system in a colossal way.
With net finance cost (inc. hybrid coupons) of $ 130 million amounting to 31 % of our average margin,
debt would
need to be halved to hit a more manageable 15 % — though bearing in mind some of that
debt's
subordinated, plus cash on hand, let's back out 50 % of the hybrid
debt — net - net this implies a $ 1.2 billion negative
debt adjustment.
Indeed, the more intense focus on loans is giving
subordinated debt lenders more financing opportunities as the
need for additional capital grows among borrowers.