agree or not?

Whether the provision of a bond is favorable to the Company or the bondholder, the benefits from a bond are determined. If the company benefits, the bond will have a higher coupon rate and if the bondholder benefit, the bond will have a lower coupon rate. A collateral is an asset that bondholders can claim in case of default of the issuer. This lowers the risk associated with the bond in case of default. A bond with collateral will have a lower coupon rate. Bondholders have the claim on the collateral, even in bankruptcy. In the case of the company issuing the bonds with collateral the disadvantage to the company is that it cannot sell the asset used as a collateral, and they should keep the asset in good condition. A bond with collateral benefits the bondholders and have a lower coupon rate. A secured bond is a type of bond that is secured by the issuer's pledge of a specific asset, which is a form of collateral on the loan. In the event of a default, the bond issuer passes the title of the asset onto the bondholders. Secured bonds can also be secured with a revenue stream that comes from the project that the bond issue was used to finance (Chen, 2019).

The more senior the bond is, the lower the coupon rate. Senior bonds get full payment in bankruptcy proceedings before subordinated bonds receive any payment. A potential problem may arise in that the bond covenant may restrict the company from issuing any future bonds senior to the current bonds. Any security labeled "senior" in such a structure is one that takes primacy over any other companys sources of capital. The most-senior securities holders will always be first to receive a payout from a companys holdings in the event of default. Then would come those security-holders whose securities are deemed second highest in seniority, and so forth until the assets used to pay off such debts run out (Jark, 2019).

The presence of a sinking fund will reduce the coupon rate. A sinking fund is a partial guarantee to the bondholders. The company should maintain the sinking fund by making interim payments into this fund and for this purpose, the company should have the ability to generate cash flows. So, the presence of a sinking fund is beneficial to the bondholders and somewhat burdensome for the company.

A call provision with specified call dates and call prices will increase the coupon rate. The existence of a call provision is advantageous to the company, since the call provision can only be used in favor of the company. The company can refinance at a lower rate if the interest rates fall significantly, which is enough to offset the cost of the call provision.

A deferred call means that the company cannot call the bond for a specific period. This implies the protection of bondholders during the particular period. Hence, the presence of a deferred call reduces the coupon rate of the bond. Thus, the presence of a deferred call is disadvantageous to the company since it cannot call the bond during the call protection period. During this period, the interest rates may fall to a level, which is beneficial to the company, but the company will not be in a position to benefit from the situation.

In a make-whole call provision, the bondholder will be repaid with the present value of the future cash flows, when such a call is made. Hence, a make call provision lowers the coupon rate when compared to a call provision with specific dates. If a bond with a make-whole provision is called, the bondholders receive the market value of the bond, which they can reinvest in another bond with similar characteristics. If it is compared with the bond with specific call price, investors will not receive the full market value of the future cash flows.

The presence of a positive covenant protects the bondholders by forcing the company to undertake actions that benefit the bondholders. Hence, a positive covenant associated with a bond reduces the coupon rate. The positive covenants are, for example, the company must maintain a specified current ratio, the company must maintain audited financial statements, the company must maintain a collateral in a good working condition and so on. However, the positive covenants may restrict the company in doing certain actions, which the company ought to do for its advancement and also, it may force the company into actions in the future that it would rather not undertake.

A negative covenant protects the bondholders by restricting the company from doing certain actions, which are harmful to the bondholders and hence, a negative covenant reduces the coupon rate. The examples of negative covenants are the company cannot issue new bonds senior to the current bond issue, the company cannot increase dividends, etc. The negative covenants restrict the actions of the companies.

A conversion feature means the feature of the bonds which enable the bondholders to convert their bonds into shares, debentures, etc., after a specific period. The conversion feature of the bonds, even though the company is not a publicly-traded company, reduces the coupon rate. This feature benefits the bondholders if the company will go public or if the company is doing well. The downside is that the company may be selling equity at a discounted price.

A floating-rate coupon is that whose interest is not fixed. It is flexible to market conditions. In addition, if interest rates rise, the company has to pay a higher rate of interest and if the interest rate falls, the company pays a lower rate of interest.