Borrowing Cheap with Zero Coupon Bonds: Three Caselets
| Case Code: FINC181 Case Length: 8 Pages Period: 2019-2021 Pub Date: 2021 Teaching Note: Available |
Price: Rs.200 Organization: Government of Ghana Industry: Government Countries: Ghana Themes: |
Abstract Case Intro 1 Case Intro 2 Excerpts
Abstract
This case is a collection of three caselets on Zero Coupon Bonds (ZCBs). The first caselet discusses Ghana’s first-ever zero coupon bond issued by the Government of Ghana (GoG). GoG planned to use this money to support its annual 2021 budget and for liability management. The second caselet discusses the ZCBs issued by Apple Inc. (Apple). With the help of the ZCBs, Apple was able to borrow from the European market at the lowest cost ever. The third caselet discusses how the Government of India (GoI) used ZCBs to infuse capital into the Public Sector Banks (PSBs) without its fiscal deficit being impacted.
Issues
The case is structured to achieve the following teaching objectives:
- To understand zero coupon bonds and how various governments and corporations around the world use them to their benefit.
- To discuss how a zero coupon bond is different from other regular bonds and what its advantages and disadvantages are
- To introduce the mechanism of estimating yield to maturity for zero coupon bonds.
Contents
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Caselet 1: Ghana Issues Zero Coupon Bond (Zcb) To Fund Its Economy
Caselet 2: Apple Borrows at The Lowest Rate Ever in Europe
Caselet 3: India Uses ZCBS to Fund its Banks
Exhibits
Keywords
Zero Coupon Bonds; ZCB; YTM; Yield to Maturity; Bonds; Government of India; Punjab and Sind Bank; Held-to-Maturity; Apple Inc.; Government of Ghana; Sovereign Bonds
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