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Topic review - Asda Buyout.
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Mister H
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 Posted: Sun Mar 28, 2021 6:44 am
yes, the company collapses with the rating of the bonds.
We see once again what used to be called back in the day "the unacceptable face of capitalism.'
Some raider decides to make a buck.
Borrows in his own name the money to buy the company. Buys the company and on the same day he buys it (thus becoming the owner) he repays his own debt with money he borrows in the company's name which he can do because he owns it..Thus loading the company (which before probably had little debt of its own) with a mountain of new debt reducing the equity to junk status.
yes, the company collapses with the rating of the bonds.
We see once again what used to be called back in the day "the unacceptable face of capitalism.'
Some raider decides to make a buck.
Borrows in his own name the money to buy the company. Buys the company and on the same day he buys it (thus becoming the owner) he repays his own debt with money he borrows in the company's name which he can do because he owns it..Thus loading the company (which before probably had little debt of its own) with a mountain of new debt reducing the equity to junk status.
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rebbonk
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Posted: Sat Mar 27, 2021 3:00 pm
From investopedia... Quote: A junk bond is debt that has been given a low credit rating by a ratings agency, below investment grade. ... Because of the higher risk, investors are compensated with higher interest rates, which is why junk bonds are also called high-yield bonds. From investopedia...
[quote]A junk bond is debt that has been given a low credit rating by a ratings agency, below investment grade. ... Because of the higher risk, investors are compensated with higher interest rates, which is why junk bonds are also called high-yield bonds.[/quote]
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rebbonk
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Posted: Sat Mar 27, 2021 2:57 pm
In very simple terms it means that the mainstream investors will not be interested as the risk of investing will be too high, hence they will be funded by gamblers hoping for a high return due to the risk. I'll bet most of the bonds/loans will be unsecured.
Personally speaking, I wouldn't touch it with a bargepole.
In very simple terms it means that the mainstream investors will not be interested as the risk of investing will be too high, hence they will be funded by gamblers hoping for a high return due to the risk. I'll bet most of the bonds/loans will be unsecured.
Personally speaking, I wouldn't touch it with a bargepole.
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margaret
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Posted: Sat Mar 27, 2021 8:24 am
Asda Buyout.
https://www.thegrocer.co.uk/stores/issa-brothers-complete-asda-takeover-deal/653248.article
What on earth does this mean?
The Issa brothers and TDR aim to fund the buyout using around £3.7bn of junk-rated debt, including a mixture of secured and unsecured bonds and loans.
[url]https://www.thegrocer.co.uk/stores/issa-brothers-complete-asda-takeover-deal/653248.article[/url]
What on earth does this mean?
The Issa brothers and TDR aim to fund the buyout using around £3.7bn of junk-rated debt, including a mixture of secured and unsecured bonds and loans.
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