What should be the coupon rate

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HYDRO ONE INC wishes to issue a new series of bonds on the market to finance a major expansion project. The maturity would be in 20 years and to establish a competitive coupon rate, we want to offer a yield of 20% higher than the yield of the last series of bonds issued. This last series has a nominal value of $ 1000 and a coupon rate of 6% (paid semi-annually). It was issued on January 5, 2015 with a maturity of 30 years, i.e. January 5, 2045. The bond sells as of today, February 15, 2022 at $1,086. What should be the coupon rate (paid semi-annually) of the new issue assuming that the bond will be available at its discounted date of issue, i.e. at the 98.5 index? Please submit all your calculations

Reference no: EM133118547

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