Public Income Notes - PINES
Categories: Bonds
If you need a quick infusion of cash, you might go to your Uncle Earl. Companies don’t typically have that option. Instead, they have debt securities, including PINES.
Similar to QUIPS and MIPS (which sound like the names of pixie tribes from some fantasy novel series), PINES get issued by public companies. They trade on stock exchanges, but (unlike stock) they also carry an interest rate, making them more like bonds.
The debt involved is unsecured (meaning it's not backed by any specific asset), kind of like your credit card balance. However, the PINES are also unsubordinated, meaning that, in the case of a financial crisis for the issuing companies, they get paid back before any subordinated debt. It makes them less risky than other forms of debt issuance.
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Finance a la shmoop what is a bond? well a bond is your word your promise your [Women shake hands]
handshake your John Hancock on a contracted piece of paper your mortgage
your credit card debt yeah their bonds to your "I swear I'm not a deadbeat"
declaration... that's your bond right well bonds come [Man lying on a sofa]
in many complex flavors and compositions simply put bonds are loans aka debt you
borrow money or you promise or you you bond that
you'll pay it back when you borrow money the amount you borrow is called the
principal you pay rent on that amount borrowed and that rent is called [rent appears at bank]
interest to the entity loaning you the money that interest is called yield
thank you very much for the yield like if the lender rents you a grand for a
year and you pay them a thousand 80 bucks at year-end paying back the
principal and then the rent on the money while the lender will have had a yield [Yield of lender appears]
of 8% on the grand that they loaned you so that's a bond you borrow money you
pay it back and if you don't the person who loaned you the dough well they [Person stamped with property of shmoop bank]
generally own your tuchus and yeah you know what Shakespeare said about bonds
yeah that's what he said so if you don't really know what you're doing don't do
it...