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[quote]QUOTE: Originally posted by MP173 PL: You posted earlier about reducing the interest payments by replacing 8% bonds with 5% bonds. That can be done if the bonds are "callable". "The ability to call bonds protects issuers by enabling them to retire bonds with high coupons and refinance at lower interest rates. Calls are bad news for bondholders. A high interest rate, thought to be locked in, disappears and the bondholder is forced to reinvest at lower rates." (The Bond Book, Annette Thau, page 17). If I want to take a nap, I grab Ms. Thau's discussion of bonds and read awhile. Within 10 pages I am dozing. Nothing against her, nor her book, but bonds really put me to sleep. Her book is the "bond book" although Larry Sweedroe has a March release on what he has indicated will be the "bond bible". Cant wait! ed [/quote]MP137 - I first discoverd the tactic of what is called "refunding" (not to be confused with a refund for dissatisfaction w/ a product) in Muray Kleins Union Pacific vol II. UP in the 50's exchanged a great deal of their early 20th century higher cost bonds backed by the real estate of the company to lower cost debentures backed by Uncle Pete's good name and word, refunding is really another word for refinancing with a few securities qualifications. ---------------------------------------------------------------------------------------Today real estate, securities and life insurance types do something similar with what is called a 1035 exchange of one form of property, policy or security with another of greater or lesser value depending on the financial objective of the effected parties------------------------------------------The other school of thought on that is the Southern Railway meathod. Get lean, work hard, automate, mechanicalize, computerize and do it with less people and lower payroll useing the earnings to wipe out a debt. You will find that well documneted in the Bio of Mr Brosnan and how he and the Southern survived into the 60's and 70's. In otherwise work your tail off and pay off the debt in full or to a reasonable level.
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