Commonwealth Edison Co.
The following article appeared in the Wall Street Journal.
· Giant Commonwealth Edison Issue Hits Resale Market With $70 Million Left Over
· NEW YORK—Commonwealth Edison Co.’s slow-selling new 9¼% bonds were tossed onto the resale market at a reduced price with about $70 million still available from the $200 million offered Thursday, dealers said.
The Chicago utility’s bonds, rated double-A by Moody’s and double-A-minus by Standard & Poor’s, originally had been priced at 99.803, to yield 9.3% in 5 years. They were marked down yesterday the equivalent of about $5.50 for each $1,000 face amount, to about 99.25, where their yield jumped to 9.45%.
How will the development above affect the accounting for Commonwealth Edison’s bond issue?
Provide several possible explanations for the markdown and the slow sale of Commonwealth Edison’s bonds.