Analyzing Debt Terms, Yields, Prices, and Credit Ratings Assume Reproduced below is the long-term debt...
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Analyzing Debt Terms, Yields, Prices, and Credit Ratings Assume Reproduced below is the long-term debt footnote from the 10-K report of Southwest Airlines.
Long-Term Debt (in millions)
2012
2011
7 7/8% Notes due 2012
$ --
$ 100
French Credit Agreements due 2017
45
37
6 1/2% Notes due 2017
375
369
5 1/4% Notes due 2019
350
336
5 3/4% Notes due 2021
300
300
5 1/8% Notes due 2022
311
300
French Credit Agreements due 2022
94
100
Pass Through Certificates
480
--
7 3/8% Debentures due 2032
103*
100
Capital leases
52
63
2,110
1,705
Less current maturities
41
122
Less debt discount and issuant costs
19
16
$ 2,050
$ 1,567
* The carrying value of these debentures is 103 while the face value is 100. The company marks these debentures to market each period because the debentures are hedged with interest-rate swaps. The swap and the debentures are both marked to market, where any gains and losses offset each other. As of December 31, 2012, aggregate annual principal maturities of debt and capital leases (not including amounts associated with interest rate swap agreements and interest on capital leases) for the five-year period ending December 31, 2017, were $41 million in 2013, $41 million in 2014, $50 million in 2015, $43 million in 2016, $419 million in 2017, and $1.5 billion thereafter. Assume below is a summary of the market values of the Southwest Airlines' bonds maturing from 2017 to 2032 (from Capital IQ).
Maturity Date
Security Type
Coupon
Offer Date
Amt. Outstanding ($mm)
Current Price
Yield
Mar-01-2017
Corporate Debentures
6.500
Feb-26-2007
375.00
97.290
7.450
Oct-01-2019
Corporate Debentures
5.250
Sep-14-2009
350.00
83.164
9.024
Mar-01-2032
Corporate Debentures
7.375
Feb-25-2002
100.00
82.409
9.408
(a) What is the amount of long-term debt reported on Southwest's 2012 balance sheet? $Answer
What are the scheduled maturities for this indebtedness? Year ($ millions)
2013
Answer
2014
Answer
2015
Answer
2016
Answer
2017
Answer
Thereafter
Answer
(d) Southwest's $375 million 6.5% notes traded at 97.290, or 97.29% of par, as of December 2013. What is the market value of these notes on that date? (Round your answer to one decimal place.) Answer
($ million)
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