Fixed vs. Floating Rate * More floating rate

- if CF move with inflation

- with greater uncertainty on future

Straight versus Convertible - Convertible if cash flows low now but high exp. growth

Special Features on Debt

- Options to make cash flows on debt match cash flows on assets

Design debt to have cash flows that match up to cash flows on the assets financed'

Overlay tax preferences

Consider ratings agency & analyst concerns

(Commodity Bonds Catastrophe Notes

Deductibility of cash flows for tax purposes

Differences in tax rates across different locales

If tax advantages are large enough, you might override results of previous step

Analyst Concerns

- Effect on EPS

- Value relative to comparables

Ratings Agency

- Effect on Ratios

- Ratios relative to comparables

Regulatory Concerns - Measures used

Can securities be designed that can make these different entities happy.

Factor in agency conflicts between stock and bond holders

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