Now, this might be a pretty dumb question, so forgive me from the outset:
If FMG is literally throwing of hundreds of millions in cash quarter after quarter, wouldn't they always use that cash (as they have last quarter) to buy back their debt at 80 cents in the dollar for as long as it takes?
So why would they spoil that fantastic deal by selling something to reduce their debt and - as a direct consequence- see the pricing of their bonds return to 100 cents in the dollar? As soon as they raise the funds, they would immediately repay a chunk at 100 cents in the dollar, their bonds would be repriced overnight and all future repayments would also be a 100 cents in the dollar.
Shouldn't the company let the worry-warts fret about their ability to service their debts while they (FMG) keep printing money to repay it at 80 cents in the dollar? If so, why sell a good asset to make everyone feel better and in so doing, lose the beautiful discount they currently enjoy?
By the way, all the talk earlier about the horrible deal FMG had to do to get this debt deal done looks a little silly now doesn't it? Remember how "FMG is hopeless because they have to pay more than 10% interest, it's going to send them broke, they won't even make enough to pay the interest, etc, etc". Well an interest rate of 10 per annum on money that can be repaid for 80 cents in the dollar seems pretty attractive in hind sight!
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