Liquid yield option note

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Liquid yield option note (LYON)

Zero-coupon, callable, putable, convertible bond developed by Merrill Lynch & Co.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Liquid Yield Option Note

A convertible, callable, and putable zero-coupon bond. A LYON is a bond that is convertible to common stock and may be bought or sold as an option, but which does not pay interest. Because it pays no interest, it is issued at a considerable discount from par value of the bond. This guarantees a positive return to the investor, at least until such time as it becomes profitable for the investor to put the bond back to the issuing company for an amount over the issue price. Generally, the total return on a LYON is less than that of the company's common stock, assuming the company does well.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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References in periodicals archive ?
Answer--LYONs (Liquid Yield Option Notes) are zero-coupon notes convertible into a fixed number of shares of common stock of the issuer.
Diversified technology company 3M (NYSE:MMM) on Tuesday delivered a notice of redemption of its USD251,896,000 remaining principal amount at maturity of Liquid Yield Option Notes (LYONs) (zero coupon-senior) due 2032.
While there, he was known for packaging unique deals such as the $965 million off, ring of liquid yield option notes (LYONs) to finance Euro Disney in 1990--at the time the largest convertible bond issue ever.
The proceeds will be used by subsidiary Elan Finance Corporation to repurchase outstanding Liquid Yield Option Notes due in the year 2018.
The Liquid Yield Option Notes, the equivalent of zero coupon convertible securities, pay 6% a year and carry a stated value at maturity of $485 million.
Question--What are LYONs (Liquid Yield Option Notes)?
In 1990, he directed a $965 million offering of liquid yield option notes (LYONs) to help finance Euro Disney.

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