Ann: DBP obtains Commitments for $480M Refinancin, page-14

re: Ann: DBP obtains Commitments for $480M Re... Most infrastructure entities hedge their interest rate exposure so the fall in nominal interest rates has no effect on their cashflow . the increase in margin to 3% means that interest costs are now 3% higher. There is always a bit of argy bargy with the regulator about what cost of capital is allowed and the cost of debt is an important part of that. An increase in margin of 3% that is not allowed by the regulator produces a negative return on equity. The bigger worry is that the regulator is proposing to require regulated entities to have A credit ratings. Almost all of the BBI entities have BBB ratings so they either need to come up with more equity or tolerate a lower earnings rate