The Kiwi Property Group plans to issue 5-year green bonds. It believes that the bonds will have a BB rating. Assuming that AAA bonds with the same maturity have a 2.55% yield and the market risk premium is 4%, use the data in Tables 1 and 2 below:

Table 1: Annual Default Rates by Debt Rating

Rating:	AAA	AA	A	BBB	BB	B	CCC	CC-C
Default Rate:
Average	0.0%	0.1%	0.2%	0.5%	2.2%	5.5%	12.2%	14.1%
In Recessions	0.0%	1.0%	3.0%	3.0%	8.0%	16.0%	48.0%	79.0%

Table 2: Average Debt Betas by Rating and Maturity

By Rating	A and above	BBB	BB	B	CCC
Avg. Beta	< 0.05	0.10	0.17	0.26	0.31
By Maturity	(BBB and above)	1 - 5 Year	5 -10 Year	10 -15 Year	> 15 Year
Avg. Beta		0.01	0.06	0.07	0.14

Required:

1. Estimate the yield the Kiwi Property Group will have to pay, assuming an expected 40% loss rate in the event of default during average economic
   2. Estimate the yield the Kiwi Property Group would have to pay if it were a great recession, assuming the expected loss rate is 70% at that time, and the market risk premium and the beta of debt both increase by 25%; that is, they equal 1.25 times their value in recessions.