Serial Bond
The repayment terms a borrower agrees to, whether for a past or future loan, can be transformed into a financial product that involves a company and the general public. Essentially, this means replacing the traditional role of a bank with the public, and the individual borrower with a corporation. When a company wants to raise money on its own terms and schedule, it can issue bonds to the public. However, for this to be feasible, the company must be publicly listed and possess a strong reputation in the industry. The company’s credibility is key to gaining the public’s trust.
Companies with a solid standing can create financial products that align with their specific cash flow needs. One such product is a serial bond, which functions similarly to how an individual might repay a loan with regular payments over time. In this case, the company agrees to repay a fixed sum annually over the bond’s life. This approach provides the company with flexibility while offering investors a reliable return over a set period.
By CA L.Muralidharan and CPA L.Mukundan
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