Think about it like this, the assets of the company are jointly...

Think about it like this, the assets of the company are jointly owned by the bond holders and the share holders, so bond holders are kind of just like other share holders except their returns are fixed to a certain interest rate, and they get no growth.

Now if our fellow investors (the bond holders), are willing to finance our operations and only earn 4% interest, while the assets of the company earn 30% or more and we shareholders get all the surplus earnings above that 4% for ourselves, why would we want to rush and pay off the bonds?

rather than buying the bonds back, it’s best for us to invest the money in new investments earning 30% return or pay ourselves dividends.

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to be honest I would be happy if all share holders (except for me) were converted to bond holders earning only 4%, and all the rest of the companies profits got paid to me in dividends.

So rather than get rid of bonds I would be in favour of the company taking on as many new bonds as possible and using the funds to buy back shares, reducing the number of share holders until it’s just me left, hahaha