“For companies using the capital market, 2010 was a banner year. Week by week, new records were set. First Microsoft and then Wall mart issued three year bonds at less than 1% while Colgate- Palmolive did five year loan notes at only 1.375%-al record low borrowing costs for companies worldwide.” (Richard Milne, Capital markets Editors, Financial Times).
Evaluation Required:
In the light of the above statement and using your own academic research, critically evaluate the ways in which companies can effectively manage their capital requirements particularly in the light of current economic conditions.
Please, any expert to point me out in the right direction, give me some information, ideas, suggestion, opinions are all welcome.
This is obviously a good time for firms to lock in fixed interest rates, or, if they have floating rate debt outstanding, use interest rate swaps to effectively convert it to fixed rate debt.
If you were to go to Google scholar or papers.ssrn.com and search on fixed versus floating rate debt you wold likely get a lot of information.
Can you please be more specific? How that conversion is made and what role do the banks plays in lowering effectivelly the cost of borrowing by the companies.
Also, the role of corporate governance?