ignoring credit quality identify four features of these issues that might account fo 665583

Assume that two firms issue bonds with the following characteristics. Both bonds are issued at par.

 

ABC Bonds

XYZ Bonds

Issue size

$1.2 billion

$150 million

Maturity

10 years*

20 years

Coupon

9%

10%

Collateral

First mortgage

General debenture

Callable

Not callable

In 10 years

Call price

None

110

Sinking fund

None

Starting in 5 years

Ignoring credit quality, identify four features of these issues that might account for the lower coupon on the ABC debt. Explain.