Bailout Bond
If you're going to bail a company out, you need a tool to accomplish the bailout. And some guts. Just because you want to bailout a company doesn't mean it will happen. After all, bailouts are usually just cash donations, and that money may not be the only thing a company is missing.
Bonds issued to help companies out of trouble are called bailout bonds. These can be issued by the company or government bonds, such as general obligation and/or special use bonds. They happen in dying or bad or heavily unionized industries, like auto-making, airlines, and railroads every now and then.
Related or Semi-related Video
Finance: What is Disinvestment?3 Views
finance a la shmoop what is disinvestment? all right you got a couple
of choices disinvestment dat-investment and but disinvestment refers to the [Man walks through door]
process of a well a kind of whiny financial boycott like you think it
comes out of Yale or something it's a common thing among university students [Boy studying in library]
who are high on intellectual horsepower and low on self-awareness or how the
world actually works like the little rich kid who complains to Daddy about
the underpaid workers in his shirt factory as the kid drives away that [Boy driving sports car]
shiny new convertible BMW with the you know souped-up stereo set yeah that's
kind of what it's like well students often protest universities investing in
things like tobacco and oil and types of technology companies and that's really
kind of funny and sad because you know students late teenagers really have tons
of professional investment experience and life experiences and they've seen
lots of market cycles and they really know what they're doing when it comes to
the long cycles of the stock market and or they're advised by professors who [Woman working on laptop]
really have risked their own capital to build a big oh wait there none of that
so yeah that's the funny part and the sad part is that well for better or
worse over time those industries that they want to boycott for their school's
endowment which then pays for scholarships for underprivileged kids
have traditionally been really good industries to invest in like they've had
good investment returns yeah like technology come on give me a break just
goes up right so when the students push the university to sell its point zero
zero zero one percent ownership of their stake in whatever company well then the
university loses those good investment gains and that endowment money that was [Money vanishes from vault]
supposed to be earmarked for scholarships for the underprivileged not
the children of rich daddies in you know BMWs while that money just isn't there
just goes away so who did all that disinvestment hurt well students five
ten twenty years later who actually needed the scholarship money and didn't
get it but at least the boycott really affected how Chevron drilled for oil there
right [Chevron drills hole into sea bed]
Up Next
What is a Bailout? Bailouts happen when a company is suffering huge losses and is about to go out of business. Some entity gives the failing compan...
What is Balance of Trade? Balance of trade is just the difference between imports and exports in a country. When imports outweigh exports, there is...
What is Activist Investing? Activist investing is done with the goal of actually implementing change at a company by buying so many of its shares....