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Originally Posted by XLexusTech
When a Company issues these what does it mean to the rest of the stock?
Meaning since these are are more secure then comoon shares... would it drive down their price?
Problem... say you have Co. x shares of stock.. Co. X issues new Senior notes... will that drive your share price down?
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That depends on what their overall balance sheet looks like -- and the reason for issuance. If they're borrowing money for the WRONG reasons then yes - it would affect the stock negatively.
Notes pay INTEREST and as such need to pay a higher rate than dividends because of the tax treatment (interest is ordinary income - dividends are taxed at the dividend rate).