GREY:LSTMF - Post by User
Comment by
blade86caon May 03, 2016 2:11am
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Post# 24835572
RE:RE:RE:RE:Jig isn't up
RE:RE:RE:RE:Jig isn't upI think at the time when LTS did get all this debt issued ( the long term debt espeically ) oil prices were at 100$ or close to 100$ anyways so all the lenders I am sure did not give one ounce of thought to what "IF" oil prices ever crashed and stayed low for prolonged period.
Basically what I am saying is it was very VERY easy to issue debt a few years ago with oil prices at 100$ and with interest rates so low. This goes for any and all companies non-investment and investment grade . The US frackers are a great example of that. Now that nearly a third of the frackers in the US have been put out of their misery , no bank will EVER loan money to them because they will remember the management team that ran their company ( and their money) into the ground.
Its true, if they loaned to a more stable company then the rate of return they get is lower but that is a jugement call on their part , what rate of return do they want and are willing to risk ( Typically I have seen most bondholders or lenders are typically people who always like to play it safe relative to investors )