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1. You are comparing the two bonds below. Please note differences and what impact each would have on how the bonds should trade relative to each other in the secondary market. Bond A: Home Depot Bond B: Lowes

1. You are comparing the two bonds below. Please note differences and what impact each would have on how the bonds should trade relative to each other in the secondary market. Bond A: Home Depot Bond B: Lowes

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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1. You are comparing the two bonds below. Please note differences and what impact each would have on how the bonds should trade relative to each other in the secondary market.

Bond A: Home Depot

Bond B: Lowes

### Bond Information: LOW 3 10/15/50 Corp #### Issuer Description - **Name:** LOWE'S COS INC - **Industry:** Retailers (BCLASS) - **Market Issuance:** Global - **Country/Region:** US - **Rank:** Senior Unsecured - **Coupon:** 3.000000% - **Coupon Frequency:** Annual - **Day Count Convention:** 30/360 - **Maturity Date:** 10/15/2050 - **Issuance Price:** 99.920000 - **Yield Spread:** +140.00bps vs T 1 1_4 05/15/50 - **Calculation Type:** 1 (30/360 Street Convention) - **Pricing Date:** 10/07/2020 - **Interest Accrual Date:** 10/22/2020 - **First Settlement Date:** 10/22/2020 - **First Coupon Date:** 04/15/2021 #### Identifiers - **FIGI:** BBG00X5PH1P9 - **CUSIP:** 548661DZ7 - **ISIN:** US548661DZ75 #### Bond Ratings - **Moody’s:** Baa1 - **S&P:** BBB+ - **DBRS:** BBBH - **Composite Rating:** BBB+ #### Issuance & Trading - **Amount Issued/Outstanding:** 1,750,000,000 USD - **Minimum Piece/Increment:** 2,000/1,000 USD - **Par Amount:** 1,000.00 USD - **Book Runners:** BCLY, GS, USB, WF - **Reporting:** TRACE ### Covenants 1. **Negative Pledge:** No 2. **Change of Control:** Yes @ 101.00 3. **Fundamental Change:** Yes 4. **Limitation of Indebtedness:** Yes 5. **Cross Default:** Yes 6. **Negative Covenant:** Yes 7. **Certain Sales of Assets:** Yes 8. **Restriction on Activities:** Yes 9. **Debt Service Coverage Ratio:** No 10. **Free Cash Flow to Debt Service Ratio:** No 11. **Restrictive Covenant:** Yes 12. **Merger Restrictions:** Yes ### Explanation of Terms
Transcribed Image Text:### Bond Information: LOW 3 10/15/50 Corp #### Issuer Description - **Name:** LOWE'S COS INC - **Industry:** Retailers (BCLASS) - **Market Issuance:** Global - **Country/Region:** US - **Rank:** Senior Unsecured - **Coupon:** 3.000000% - **Coupon Frequency:** Annual - **Day Count Convention:** 30/360 - **Maturity Date:** 10/15/2050 - **Issuance Price:** 99.920000 - **Yield Spread:** +140.00bps vs T 1 1_4 05/15/50 - **Calculation Type:** 1 (30/360 Street Convention) - **Pricing Date:** 10/07/2020 - **Interest Accrual Date:** 10/22/2020 - **First Settlement Date:** 10/22/2020 - **First Coupon Date:** 04/15/2021 #### Identifiers - **FIGI:** BBG00X5PH1P9 - **CUSIP:** 548661DZ7 - **ISIN:** US548661DZ75 #### Bond Ratings - **Moody’s:** Baa1 - **S&P:** BBB+ - **DBRS:** BBBH - **Composite Rating:** BBB+ #### Issuance & Trading - **Amount Issued/Outstanding:** 1,750,000,000 USD - **Minimum Piece/Increment:** 2,000/1,000 USD - **Par Amount:** 1,000.00 USD - **Book Runners:** BCLY, GS, USB, WF - **Reporting:** TRACE ### Covenants 1. **Negative Pledge:** No 2. **Change of Control:** Yes @ 101.00 3. **Fundamental Change:** Yes 4. **Limitation of Indebtedness:** Yes 5. **Cross Default:** Yes 6. **Negative Covenant:** Yes 7. **Certain Sales of Assets:** Yes 8. **Restriction on Activities:** Yes 9. **Debt Service Coverage Ratio:** No 10. **Free Cash Flow to Debt Service Ratio:** No 11. **Restrictive Covenant:** Yes 12. **Merger Restrictions:** Yes ### Explanation of Terms
### Bond Information for HOME DEPOT INC (09/15/51) #### Issuer Information - **Name**: HOME DEPOT INC - **Industry**: Retailers (BCLASS) #### Security Information - **Market Issuance**: GLOBAL - **Currency**: USD - **Rank**: Senior Unsecured - **Series**: Applied - **Coupon Rate**: 2.750000% - **Type**: Fixed - **Coupon Frequency**: Annual - **Day Count Basis**: 30/360 - **Issue Price**: 98.930000 - **Maturity Date**: 09/15/2051 - **Callable**: MAKE WHOLE @15.000 until 03/15/51, Call @3.000 on 09/15/51 - **Issue Spread**: +82.00 basis points vs Treasury 2 3/8 05/15/51 - **Calculation Type**: (1)STREET CONVENTION #### Pricing Dates - **Pricing Date**: 09/07/2021 - **Interest Accrual Date**: 09/09/2021 - **First Settlement Date**: 09/21/2021 - **First Coupon Date**: 03/15/2022 #### Identifiers - **FIGI**: BBG012FSDCF9 - **CUSIP**: 437076K64 - **ISIN**: US437076K641 #### Bond Ratings - **Moody’s**: A2 - **S&P**: A - **Fitch**: A - **DBRS**: A #### Issuance & Trading - **Amount Issued/Outstanding**: $1,000,000,000.00 (million USD) - **Minimum Piece/Increment**: $2,000.00 / $1,000.00 - **Par Amount**: $1,000.00 - **Book Runner**: BofA, GS, JPM, USB - **Reporting**: TRACE --- ### Covenants 1. **Negative Pledge**: No 2. **Change of Control**: Yes @ 101.00 3. **Fundamental Change**: No 4. **Limit of Indebted
Transcribed Image Text:### Bond Information for HOME DEPOT INC (09/15/51) #### Issuer Information - **Name**: HOME DEPOT INC - **Industry**: Retailers (BCLASS) #### Security Information - **Market Issuance**: GLOBAL - **Currency**: USD - **Rank**: Senior Unsecured - **Series**: Applied - **Coupon Rate**: 2.750000% - **Type**: Fixed - **Coupon Frequency**: Annual - **Day Count Basis**: 30/360 - **Issue Price**: 98.930000 - **Maturity Date**: 09/15/2051 - **Callable**: MAKE WHOLE @15.000 until 03/15/51, Call @3.000 on 09/15/51 - **Issue Spread**: +82.00 basis points vs Treasury 2 3/8 05/15/51 - **Calculation Type**: (1)STREET CONVENTION #### Pricing Dates - **Pricing Date**: 09/07/2021 - **Interest Accrual Date**: 09/09/2021 - **First Settlement Date**: 09/21/2021 - **First Coupon Date**: 03/15/2022 #### Identifiers - **FIGI**: BBG012FSDCF9 - **CUSIP**: 437076K64 - **ISIN**: US437076K641 #### Bond Ratings - **Moody’s**: A2 - **S&P**: A - **Fitch**: A - **DBRS**: A #### Issuance & Trading - **Amount Issued/Outstanding**: $1,000,000,000.00 (million USD) - **Minimum Piece/Increment**: $2,000.00 / $1,000.00 - **Par Amount**: $1,000.00 - **Book Runner**: BofA, GS, JPM, USB - **Reporting**: TRACE --- ### Covenants 1. **Negative Pledge**: No 2. **Change of Control**: Yes @ 101.00 3. **Fundamental Change**: No 4. **Limit of Indebted
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