I think the bears forgot how to add and subtract. This is from a bond market update this morning:
"Unless and until the new bank deal is finalized, this emergency borrowing leaves the company facing not $3.1 billion in potential maturities next year but nearly $6 billion," wrote Carol Levenson, director of research at fixed-income research service Gimme Credit. "It also lifts debt/projected EBITDA (earnings before interest, taxes, depreciation and amortization) to 4.5x."
She seems to think the $2.65 billion drawn yesterday just evaporated into thin air. What kind of credit analyst ignores cash? Plus, if the line was drawn to preserve a "term-out" option, then her conclusion that this would increase next year's maturities by $2.65 billion (I like the way she rounded up by a quarter billion, BTW) is just plain ignorant. Even if they don't get the new bank lines and use the money elsewhere rather than paying it back right away, all they need to do is exercise the term-out and it becomes long-term debt.
Did these "analysts" buy their MBA diplomas on Ebay or just sleep through the finance classes? |
