ATC Chart, page-258

A few of my thoughts about the Mezz debt before it gets finalised.

Generally Mezz debt rates well behind secured debt and abouton par with junk bonds.  It’s level ofrisk justifies a interest premium above the Libor or Shibor in comparison to othersimilar risk debt securities and often a sweetner like options or equity.

 

We know a few things (open to low dispute) about internationalgovernment interest rates over the past few months:

1)   US corporates have in recent years being (re)financingat high to take advantage low rates. – ample liquidity.

2)   The sharp fall in markets in October to Decemberin Asia has by attributed to trade dispute tensions.  My understanding from several economists isthat the fall in emerging markets was as much due to a drying up of liquidity viz.the us buying back bonds to shrink it’s balance sheet. Asian markets due totheir demand for capital and debt fell sharply. Many Emerging currencies Most notably Indi & Indonesia but alsoChina fell sharply.

3)   Prior to December the US was in raising modewith a pause in January.

4)   The V up in Equity markets followed this news.  

 

My take WRT ATC.

1)    we areseeking mezz debt along with others and got crunched.

2)   Based on all the above Iggy’s pointing out of otherbattery metal hopefuls (speculatives) was not wrong if simplified.

3)   Out plant is being built in Asia and we areseeking Mezz debt competing with others.

4)   While we didn’t get the debt in Oct through Dec. We are more likely to get it and at abetter rate (I would say 1% p.a.) now simply by comparatives as the liquidity crunchis easing (for the moment ?).

5)   The SP recovery probably incorporates much of this.

 

While we felt the pain before the whole episode and outtiming is not all that bad.

 

One further thing Australia’s demand for capital and debt ispriced in relative interest rates and reflect currencies.  You will have noted our own RBA ‘s pronouncement.It has led to the Aussie falling but we sell HPA in USD ( and price outloans  of capital equipment in the same).

 

 Sorry if you know ordispute any or all of this. (I’ve seen elements mentioned as they occoured).