The Triviality of Capital Ownership

K. Bevans kbevans at panix.com
Mon Dec 21 04:40:58 PST 1998


C. Leung,

Bondholders actually lend working capital where stockholders, other than at new issues, do not. Also, bondholders are contractors with the firm, not owners. The question with bondholders is whether credit is issued in a restrictive environment, giving bondholders undue influence and allowing them to extract unreasonable interest. In principle, however, bondholding is not an oppressive relationship.

Even under capitalism today, the bond market is very competititve and it keeps interest rates in a fairly tight band and fairly reasonably priced versus risk.

peace



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