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24 January, 01:32

Why might one prefer to issue fixed rate bonds rather than floating rate notes?

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  1. 24 January, 05:26
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    The advantages of issuing fixed rate bonds is that because the rates are fixed the interest payments are also fixed which means that the company can plan in advance their payments and face no surprises. Also if interest rates rise in the future the company will have not have to increase the interest payments because they have issued fixed rate bonds, whereas if they issued floating rate notes they would have to increase interest payments when interest rates increased.
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