RE:RE:RE:RE:RE:RE:Better rates ?Hi Pablo.
There is always a cost for doing business as u know. In this instance they added the 2 Bonds of 2026/7 to total $2.7B. Yet they gotta bring them down to $750M each. They know that they have 2 diferent rates for the 2. Without too much calculation here it's easy to figure out their path on this.They have a plan, they'd like every new issue not exceeding the $750M, so they can pay it off with cash on hand. This makes sense, because their +FCF every year going forward, is going to be roughly in that range. So they are anticipating to pay any maturing issue from cash on hand and not sweat it.
You aren't a little naive that you mention above for thinking that their moves are tied together. They are tied together. $1.78B is a lot of money to pay on maturity for any bond. So they are mitigating those large amounts. Yes they'll pay $13 mill, or what ever the penalties are But it makes their life, and their company's life a lot stabler with this direction.
You and I have talked about this often. Their LTD must come down, and just the other day you said you cringed at how much ($1.78B) the 2019 DiBert Bond issue due in 2027 was. Bart D is a smart CFO, smarter than Dibert, and he'll take us to a place that the company will get stable enough to self-finance, where their owners, and its Investors will get a great return on their Investment.
PabloLafortune wrote: 859, the cost of all of this is at least $13M that I can tell. Before & after interest is a wash but there are fees and premiums to be paid.
Extending debt runway is always good of course especially when youre not generating sufficient cash to pay it off AND if you believe interest rates will rise. I happen to believe they're coming down and will go down further therefore, it would have been better to wait.
Im naive of course as its kind of obvious that all 3 transactions - the $750M 2031, the $550M 2026 and the $200M 2027 - are tied together and issuing the 2031's to strictly pay down 2027's was probably not an option.
i always look at it from the other side. And its a good day for bondholders. Exchange 2026/2027 bonds for 2031's on a decent credit at what will turn out to probably be a fabulous rate ie bonds will trade above par down the road, AND get paid a $13,000 bonus per $1M to do so.
That said, some famous bond trader Bill G? interviewed recently said he was long 2 years and short 5-10 ie expecting short term rates to fall and long term rates to rise.