medium · Debt Capital Markets Pricing, Yields & the Yield Curve
An issuer is deciding between issuing a 'bullet' bond and a 'sinker' (sinking fund) bond.
A sinker bond is generally more attractive to an issuer who is concerned about:
- Negative convexity and the risk of being put back the bonds at a premium.
- The 'greenium' and meeting ESG key performance indicators.
- Interest rate volatility and the desire to keep a constant DV01 profile.
- Refinancing risk and the pressure of a single large maturity 'wall.'
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