63. Valuation of debt, hybrid instruments, and embedded derivatives

Track: 
Fair Value Measurements
Field of Study: 
Accounting
CPE Credit: 
1.5
Knowledge Level: 
Intermediate
Prerequisite: 
Basic knowledge of, or general experience in, forensic accounting, business valuation, or litigation

Wednesday, November 7, 2018
 
10:30AM-11:45AM

This section will cover different types of debt instruments (straight debt, callable debt, convertible debt, debt-like preferred stock, etc.), methodologies for developing the credit rating, market yield, and for the valuation of the underlying instrument. In addition, we will discuss most commonly recognized embedded derivatives and the methodologies used to value these derivatives.

Learning objectives:

  • Recognize different types of debt (straight debt, callable debt, convertible debt, debt-like preferred stock, etc.)
  • Recognize the economics of each debt instrument and the value-driving factors; Identify features of the debt instrument(s) that may require additional accounting and valuation considerations
  • Identify methodologies to value various types of debt and embedded derivatives
  • Recognize the driving factors behind the debt's credit rating
  • List methodologies to develop a synthetic credit rating for the subject company and the subject debt
  • Identify how to factor in debt's seniority, presence of collateral and third-party guarantee into the yield
  • Recognize how to develop the market yield for the debt


SESSION SPEAKER(S)

Principal - Transaction Services, Grant Thornton