The Devil's Deal

chapter

7

Very interesting, Mr Bond

Jerry once came back from a meeting with HR and informed

us that he had been told to brush up his appraisal techniques.

‘They’ve told me that every negative comment has to be preceded

by some positive news.’

Jerry looked out of the window. ‘What a beautiful day,’ he said.

And then he looked at Jonathan Spurrier. ‘And you are the

biggest idiot that ever walked across the earth.’

By now Jerry’s workforce was thirty-strong and we all laughed.

But I was starting to feel sorry for Jonathan. Jerry’s humour often

crossed into bullying. His latest torture was the Rapid Fire Round.

At the end of each day Jerry would pick someone at random.

They were given an evening to prepare a topic. The next morning

they had to stand up in front of the whole department while

Jerry red off questions. It was an ordeal all of us had to suffer but

Jonathan was chosen more often than the rest of us put together.

One morning Jerry, his clothes reeking of cigarette smoke and

gin, made Jonathan stand up and tell us what he knew about

bonds.

The old principle/principal trade-off

‘A bond is a debt obligation.’

‘What does that mean?’ Jerry interrupted.

‘It’s like an IOU. A company or government issues a bond. It

promises to pay the investor interest payments and to pay back

the amount of the loan.’

Welcome to the jungle88

‘When?’

‘On dates set out in a contract.’

‘What do investors call these interest payments that ow from

a bond?’

‘Coupons.’

‘Why?’

‘Because the bond used to be a big piece of paper. Investors tore

off a coupon every six months and exchanged it for cash at a

bank.’

Jonathan was doing well. It grieved me to see that Jonathan’s

condence made Jerry more aggressive.

‘What happens at the end of the bond’s life?’

‘The bond matures.’

‘And?’

‘The principal is paid back to the investor.’

‘What’s that?’

‘The principal is the original value of the bond. If you paid £100

for the bond ten years ago, the company has to pay you back

£100 on maturity.’

‘What’s maturity?’

‘It’s the life of a bond. Some bonds last for a year, some last for

forty. Five- and ten-year bonds are common.’

Jonathan certainly knew the terminology. Perhaps he was cleverer

than he’d let on.

‘Anything you’d care to add?’ There was a sneer in Jerry’s voice.

Jonathan took a deep breath and stared straight into Jerry’s face.

‘A rm issuing bonds gets in cash but doesn’t give away any

control. Bondholders can’t tell you how to run your company,

no matter how many bonds in the company they hold.’ I was