01 Credit Sights Market Overview

True

True or False: Fixed income markets are slightly larger than global equity markets.

Equity

• Represents ownership in a company (common stock)

• Includes voting rights and potential for unlimited price appreciation

In a default or liquidation equity:

is at the bottom of the capital stack (last to be paid).

Debt

• Legal obligation to repay borrowed money.

• Issued typically at par value, repaid at maturity.

• Fixed income typically pays regular interest (coupon).
  

Debt pricing factors:

• Capital structure rank

• Issuer credit rating

• Tenor (length to maturity)
  

Types of debt instruments

Loans and Bonds

Loans

• Provided by banks or private lenders.

• Floating rate (usually SOFR + spread).

• Usually secured and amortizing (principal repaid over time).

Bonds

• Pay interest (coupon) and principal at maturity (lump sum).

• Mostly fixed-rate, some floating-rate exist.

• May be secured or unsecured.
  

Capital Structure Hierarchy

1. First Lien / Secured Debt (highest priority)
   

2. Senior Unsecured Debt
   

3. Junior / Subordinated Debt
   

4. Hybrid Securities
   

5. Common Equity (lowest priority)
   

Which forms of debt rank above senior unsecured notes in the capital structure?

• Revolving credit facilities

• Preferred Shares

• Hybrid Securities

• Pro-Rata Bank facilities

• 2nd Lien Notes

• Revolving credit facilities

• Pro-Rata Bank facilities

• 2nd Lien Notes

What represents the largest share of US fixed income outstanding?

• Private Credit

• Equities

• Municipal Bonds

• Treasuries

• Structured Products including MBS

Treasuries

True or False: Charter has bank debt and common equity

True

True or False: Charter has a private capital structure

False

True or False: Charter's 1st lien leverage is > 5x

False

True or False: Charter's bank loans and secured notes have the same priority in the capital stack

True