VALUING TARP PREFERRED STOCK

Linus Wilson

Review of Business and Finance Studies, 2013, vol. 4, issue 1, 17-22

Abstract: This is the only paper to provide a valuation framework for untraded Troubled Asset Relief Program (TARP) preferred stock. Up to $8.1 billion of bailout preferred stock, which is currently paying dividends, could be auctioned to investors. The first auction was held in March 2012. This paper provides a framework to estimate future dividend skipping rates and the rating of unrated and untraded preferred stock issues. It provides a valuation model for non-distressed issues. The model in the paper accurately predicted that the auction of MainSource Financial Group (MSFG) would raise about $53 million.

Keywords: Auctions; Bailout; Banks; Capital Purchase Program; Dividends; Hybrid Securities; Preferred Stock; Private Placements; Ratings; TARP; Troubled Asset Relief Program; Valuation (search for similar items in EconPapers)
JEL-codes: G01 G21 G28 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (1)

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