1) Issue Debt
2) Issue Stock
If you were a manager when would you issue debt vs. stock and vice versa?
Generally it is a some combination of both but there are reasons for each.
Debt gives you better tax benefits and when interest rates are low, you might want to issue debt so you pay out less interest. Debt also depends on the credit worthiness of the company (ie AAA vs AA vs A vs BBB....etc). There are a lot of variable that go into issuing debt.
Stock on the other hand is a one and done deal. If you are public company then you already know what you are going to get. If your stock is trading at $50 a share then you are going to get roughly $50 x # of shares you are going to issue. Most likely you will get less than $50 a share since you will be adding to the total shares outstanding and diluting the stocks value but the current price is a good proxy.
So back to the question or more specifically, when would you issue stock?
The answer is when you think it is as high as it's going to get! That way you get the most bang for your buck.
The lesson here is when you hear of a good company getting ready to issue more stock - be very weary - it has a higher probability of going DOWN!
Check out WYNN stock:
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