What is a Rate Trigger?
How Does a Rate Trigger Work?
Now let's assume that three years go by and interest rates have fallen considerably. Company XYZ talks to investment bank ABC and learns that it could bonds at just 5%. This would save it millions in interest expense.
Accordingly, the 5% acts as a rate trigger, and Company XYZ decides to borrow the money back, but they lose out on seven more years of 10% payments.and use it to pay off the 10% bonds seven years early. The people who owned the 10% bonds get their
Why Does a Rate Trigger Matter?
Rate triggers prompt change. They have major effects for investors who hold, because their has an incentive to the securities in order to save .
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.