Method for structuring an obligation

• US 8,396,773 B2
• Filed: 11/05/2002
• Issued: 03/12/2013
• Est. Priority Date: 06/29/2001
• Status: Active Grant

• Current Assignee: Goldman Sachs & Co. LLC (Goldman Sachs Group Incorporated)
• Original Assignee: Goldman Sachs & Company (Goldman Sachs Group Incorporated)
• Inventors: Ross, Ivan, Jones, Emerson P.
• Primary Examiner(s): Kazimi, Hani M
• Application Number:
  US10/288,050
• Publication Number:
  US 20030163400A1
• Time in Patent Office: 3,780 Days
• Field of Search: 705/26, 705/34, 705 35- 38
• US Class Current: 705/36.R
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A method for structuring an obligation. More particularly, a method for structuring an interest-bearing obligation which is convertible into stock.

Claims

1. A computer-automated method for conducting a transaction, comprising:

setting a maturity date for an obligation issued by an issuer via a computer-automated system;

setting an initial yield for the obligation, wherein the initial yield is applied to the obligation for an initial time period;

setting a current yield for the obligation equivalent to one of a first reset yield and a second reset yield, depending upon a value of a share of a stock in relation to an accreted conversion price of the obligation;

applying the current yield to the obligation after the initial time period has elapsed;

converting the obligation into the stock according to a conversion formula;

permitting the issuer to truncate the maturity date; and

making at least one payment based on the current yield;

wherein the current yield is set essentially continuously on a real-time basis.

2. The method of claim 1, wherein the first reset yield equals a rate that would result in a trading price of par of a hypothetical issue of a debt security of a reset rate target entity, wherein the terms of the hypothetical issue of the debt security include:

(i) a predetermined maturity; and

(ii) an aggregate principal amount substantially equal to an accreted principal amount of the obligation.

3. The method of claim 1, wherein each of the initial time period, the initial yield, the first reset yield, and the second reset yield equals a value selected from the group consisting of:

a) a value set by the time of issuance of the obligation; and

b) a value set after the time of issuance of the obligation.

4. The method of claim 1, wherein at least one of the initial time period, the initial yield, the first reset yield, and the second reset yield has at least one of an upper limit and a lower limit.

5. The method of claim 1, wherein at least one of the initial time period, the initial yield, the first reset yield, and the second reset yield has a value which depends upon a sliding scale.

6. The method of claim 5, wherein the sliding scale is set by the time of the issuance of the obligation.

7. The method of claim 5, wherein the sliding scale changes over time.

8. The method of claim 1, wherein the second reset yield equals the initial yield.

9. The method of claim 1, further comprising setting at least one of an issue price and a nominal maturity value for the obligation.

10. A computer-automated method for conducting a transaction, comprising:

setting a maturity date for an obligation issued by an issuer via a computer-automated system;

setting an initial accretion rate for the obligation, wherein the initial accretion rate is applied to the obligation for an initial time period;

setting a current accretion for the obligation equivalent to one of a first reset accretion rate and a second reset accretion rate, depending upon a value of a share of a stock in relation to an accreted conversion price of the obligation;

applying the current accretion to the obligation after the initial time period has elapsed;

converting the obligation into the stock according to a conversion formula;

permitting the issuer to redeem the obligation according to a redemption formula;

permitting a holder of the obligation to require the issuer to re-purchase the obligation according to a re-purchase formula;

permitting the issuer to truncate the maturity date; and

making at least one payment based on the current accretion rate;

wherein the current accretion rate is set essentially continuously on a real-time basis.

11. The method of claim 10, further comprising setting at least one of an issue price and a nominal maturity value for the obligation.

12. A computer-automated method for conducting a transaction, comprising:

setting a maturity date for an obligation issued by an issuer via a computer-automated system;

setting an initial yield for the obligation, wherein the initial yield is applied to the obligation for an initial time period;

setting a current yield for the obligation equivalent to one of a first reset yield and a second reset yield, depending upon a value of a share of a stock in relation to an accreted conversion price of the obligation;

applying the current yield to the obligation after the initial time period has elapsed;

converting the obligation into the stock according to a conversion formula;

permitting the issuer to truncate the maturity date; and

making at least one payment based on the current yield;

wherein the current yield is set essentially continuously on a real-time basis;

wherein at least one of the initial time period, the initial yield, the first reset yield, and the second reset yield has a value which depends upon a sliding scale.