Modeling of the Bond Issue Parameters for the Capital Structure Optimization

Abstract

The article proposes a computational model with eightstep algorithm for usage bond issuance as a systematic instrument to finance corporate assets by optimal capital structure. The crucial model points are methodologically accurate calculation of the average credit spread accounting the difference in maturity of marketable and modeled issues and the consideration of market factors. The model allows using debt financing as a financial manager's tool for funding and lowering cost of capital.Index Terms-bond issue, computing debt instruments parameters, optimal capital structure, cost of capital, financial simulation model