@equityma It's interesting read but it's too much for me. Which...

@equityma

It's interesting read but it's too much for me.

Which parts are you having difficulties with? I’m happy to provide further explanation if things aren’t clear enough.

put it simple there're a lots of road work that has forced people to use alternative routes and citylink/eastlink are the only option. I mean more income for tcl.

Do you see traffic volumes decrease in the future as a result of those road works being completed? If so, why?

the equities raise through entitlement offer is the best choice over debts as interest rate is raising and that's not going to affect what so called bond proxy stocks like tcl

I disagree. I vastly prefer debt over equity financing (because the former is not dilutive) as long as the balance sheet doesn’t get too stretched (which it isn’t) and financing costs are not too high (which they aren’t).

As to interest rates going up, are you sure? At this time last year, the 30-year Australian Government Bond yield was above 3.90%, and pretty much everyone was saying it could only go up from there; today it is 3.30%. The move lower in the long-term real yield has also been significant, from 1.04% (in the 2040 indexed ACGB) to 0.68% today. What makes you think that those yields will go up from where they are now?

By the way, even if Transurban were debt-free, the PV of their concessions would still be hugely sensitive to the level of long-term real yields; it is just the effect of discounting future cashflows, and it has almost nothing to do with the level of the overnight cash rate.

I'm wondering the discount price for the entitlement offer is only about 5% compared to the closing price. Is it attractive enough for investors to cough out billions of dollars.

The point here is not so much the discount to the last closing price, but the expected IRR (Internal Rate of Return) you’re locking in at the offer price. My guess is that the discount doesn’t need to be big, in order to attract investor appetite, because (also as a consequence of this deal getting finalised in the format that it has) the IRR is already quite high even before discount; in actual fact, I will personally be happy to further increase my holding even at some premium to the last closing price, when trading resumes.

IMHO & DYOR