Just a thought process that has entered my tiny pommy...

Just a thought process that has entered my tiny pommy mind.....continuing on from my observations yesterday (as if anyone cared....)

The banks are caught by the short and curly bits - damned if they do and damned if they don't - given the environment is all about credit and the chances of a re-fi are unlikley given the blood on Wall street.......

So what if the unsecured banks and others considered converting part of their debt to equity or at worst convertible notes........ie say charging 11% per annum as a coupon rate (CNP coud afford increased rates) with option to convert as at today's price (say 25c).

In this way the banks dont get shot for poor credit decisions as the debts are capitalised and reduced through reducing LVR's - therefore reducing the medium term risk of depreciating assets...but the upside is covered by the conversion to equity at potentially very profitable levels (lets face it if the banks actaully agreed to somethign like this the SP would rise dramatically). In the interim they have also priced for additional risk - so everyone wins - the banks positin is NO worse off - because a re-fi is unlikely given current climate and the business is headign in the right direction operatinally - shareholders get increased SP - and we all win .....eventually ....

What do you reckon?

please DYOR