2 years and a smoother refinancing profile; securing long-term, fixed-rate funding at competitive rates; improved asset substitution
flexibility to facilitate ongoing portfolio management initiatives like an asset recycling programme; diversification of financing sources to a broader base of local and international banks, as well as US insurance companies; and a more efficient and flexible balance sheet that lowers surplus cash and adds a revolving credit facility for liquidity requirements.
One of them, the asset substitution
hypothesis, argues that shareholders may increase debt due to the unbalanced distribution of benefits and risks around investment projects financed with external capital (Jensen and Meckling,1976).
For example,  identified agency cost of debt in the form of asset substitution
or risk shifting problem.
To the extent that such protective covenants restrict asset substitution
via sale and lease-back arrangements, the ability of stockholders and managers to increase the risk of the firm is deterred.
In Chapter 7, two classic agency problems are considered: the asset substitution
problem where the investors do not know whether the firm invests in the riskier project or not, and the underinvestment problem, where the conflict between shareholders and bondholders results from the sharing of the benefits of a new project, even when this is appropriately valued in financial markets.
The new Asset Substitution
Product gives qualified borrowers a unique advantage.
Kalay, 1983, "On the Asset Substitution
Problem", Journal of Financial and Quantitative Analysis, 18:21-30
Keywords: dollarization, currency substitution, asset substitution
, foreign currency, transition economies, Armenia
More assets-in-place implies a smaller potential for asset substitution
problems, and a lesser need for monitoring (Johnson, 1997a).
In that literature, it is said to take two key forms: currency substitution is the use of foreign currency as a means of payment for transactions; and asset substitution
is the use of foreign currency denominated assets as a store of value.
6330(c)(2)(A), the taxpayer may raise any relevant collection issues at the Appeals hearing, including the propriety of the IRS's intended collection action, spousal defenses and possible alternatives (including asset substitution
, an installment agreement or an offer in compromise).
John and John (1993) analyze optimal CEO compensation for mitigating the problem of asset substitution
when the firm has debt in its capital structure.