Bondholders review a company’s debt structure to understand internal factors that might prevent the business from repaying its outstanding loans. They also pay attention to external elements such as the state of the economy and business performance, trying to make sure market forces won’t have adverse effects on borrowers’ solvency and financial soundness.
Debt Structuring (Definition)
A debt structure provides a historical window into a company’s liabilities, indicating to investors the maturity dates of corporate debts. The idea is to tell investors how soon the business must settle debts and whether it has the money to do so. The term “debt structure” draws on the concept of debt, which is a sum of cash a borrower must repay through periodic installments or in a lump-sum payment.