Western Asset Global 404280DR7 Bond
| EHI Fund | USD 6.71 0.04 0.60% |
Western Asset Global holds a debt-to-equity ratio of 0.399. With a high degree of financial leverage come high-interest payments, which usually reduce Western Asset's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Western Asset's liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Western Asset's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Fund is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Western Fund's retail investors understand whether an upcoming fall or rise in the market will negatively affect Western Asset's stakeholders.
For most companies, including Western Asset, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Western Asset Global, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Western Asset's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Western |
Given the importance of Western Asset's capital structure, the first step in the capital decision process is for the management of Western Asset to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of Western Asset Global to issue bonds at a reasonable cost.
| Popular Name | Western Asset HSBC Holdings PLC |
| Specialization | High Yield Bond |
| Equity ISIN Code | US95766B1098 |
| Bond Issue ISIN Code | US404280DR76 |
| S&P Rating | Others |
| Maturity Date | 3rd of November 2028 |
| Issuance Date | 3rd of November 2022 |
| Coupon | 7.39 % |
Western Asset Global Outstanding Bond Obligations
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Understaning Western Asset Use of Financial Leverage
Understanding the composition and structure of Western Asset's debt gives an idea of how risky is the capital structure of the business and if it is worth investing in it. The degree of Western Asset's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
Western Asset Global High Income Fund Inc is a closed ended fixed income mutual fund launched and managed by Legg Mason Partners Fund Advisor, LLC. The fund is co-managed by Western Asset Management Company, Western Asset Management Company Limited, and Western Asset Management Company Pte. Ltd. It invests in the fixed income markets across the globe. The fund invests in undervalued bonds of companies operating across diversified sectors. It seeks to invest in a portfolio of below investment grade fixed income securities, emerging market fixed income securities and investment grade fixed income securities. The fund employs quantitative analysis to build its portfolio. It invests in fixed income securities with an average credit quality of BB as per SP and an average duration of 3.8 years. The fund benchmarks the performance of its portfolio against the Barclays Capital U.S. Aggregate Index, the Barclays Capital U.S. Corporate High Yield 2 percent Issuer Cap Index, and the JPMorgan Emerging Markets Bond Index Global. It was formerly known as Salomon Brothers Global High Income Fund Inc. Western Asset Global High Income Fund Inc was formed on July 28, 2003 and is domiciled in the United States. Please read more on our technical analysis page.
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Other Information on Investing in Western Fund
Western Asset financial ratios help investors to determine whether Western Fund is cheap or expensive when compared to a particular measure, such as profits or enterprise value. In other words, they help investors to determine the cost of investment in Western with respect to the benefits of owning Western Asset security.
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What is Financial Leverage?
Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.Leverage and Capital Costs
The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.Benefits of Financial Leverage
Leverage provides the following benefits for companies:- Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
- It provides a variety of financing sources by which the firm can achieve its target earnings.
- Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.