Question

In general in a company when Is it a good time to issue stocks? What factors favor issuing and what factors do not? What should be taken into account?

How will investors and the market react to the large size of the offering? Would the series of smaller issues be a better strategy?

How does financing with corporate bonds typically differ from a bank loan?

What are the major uncertainties that a firm faces when it issues securities?

Answer 1

Since it involves multiple questions i would be answering first question which has 4 subparts in it.

1) Generally it is considered that when a company has a good track record of generating profits and have started with positive net profit atleast for 2-3 continuous years then it is recommended for the company to go for a public issue.

Factors favor issuing - The current sentiments in the market, the sector position or overall wind of sentiments specific to that sector and debt obtaining terms like interest current ongoing in the market plays an important role and can favor the issuing of the stocks.

Factors do not favor - There are certain factors which do not favor the public issue which includes having large amount of debt on the books along with a large capex which is required to generate future growth.

We should generally consider the overall context which involves internal and external factors both as discussed above to analyse any public issue.