Enron Corp.: Credit Sensitive Notes
Essay Preview: Enron Corp.: Credit Sensitive Notes
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Case: Enron Corp.: Credit Sensitive Notes (HBS Case 29709)
The purpose of a case is to challenge you to identify the key issues of the decision situation at hand. Try to put yourself in a position of investor who decides if she should buy Enron CSN. Here are a few pointers:
What is a credit derivative?
Why is the management of the firms “own” credit risk important to its derivatives operations?
What are the different approaches to managing ones own credit risk?
How are credit derivatives being used as an alternative to other approaches of managing credit risk? Are they more efficient?
The Enron credit sensitive note (CSN) is an example of security with embedded credit derivative to manage issuer credit risk. What are the benefits to the issuer of such a note?
What can you infer about the Enron perception of its own future credit standing?
As a buyer of Enron CSN, how would you analyze its value? What are the benefits to the buyer of this issue?
You may organize and draft report in whichever way you see fit. If you feel that you have to make any assumptions, please do it by stating them clearly in your report. Please note: Those questions are designed to guide you to important points in your analysis. What is important and what is not in the case itself is up to you to determine and is part of a challenge for this case.
Case: The B. F. Goodrich-Rabobank Interest Rates Swap
The purpose of a case is to challenge you to identify the key issues of the decision situation at hand. Here are a few pointers:
How large should be the discount (X) to make the deal attractive for Rabobank?
How large should be the annual fee (F) to make this an attractive deal for Morgan Guaranty?
What should be the combination to make deal attractive for B.F. Goodrich?
Is this an attractive alternative for the saving banks?
Is this the deal where everyone wins? If not, who is the loser?
You may organize and draft report in whichever way you see fit. If you feel that you have to make any assumptions, please do it by stating them clearly in your report.
Please note: Those questions are designed to guide you to important points in your analysis. What is important and what is not in the case itself is up to you to determine and is part of a challenge for this case.
I expect the report to be no longer than 8 pages plus appendices if necessary. Please use 11pt font