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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (57589)	7/21/2016 2:25:41 PM
From: Graham Osborn	Respond to of 78744

I hear you and agree with all of the above - I've opted for a new lease just recently. For companies that have ample FCF, as may be the case here, a delevering phase isn't a disaster although obviously that's less FCF for reinvestment. But for companies that are assuming re-fi ability with potential inability to service principal, it's a bit like having a variable-interest loan. No one knows the future path of rates, but it could be a risk if rates do rise at some point. I'm currently encountering this issue with TEVA which has taken on an additional 15B in debt recently to buy part of AGN - I doubt they will be able to service and if the covenants trigger a need to refi I'm not sure they could get the same terms. Just a thought as we navigate these somewhat uncharted waters.