Hi te,
CBA is in a much different space re debt than either BHP or RIO because banks borrow
money and then lend it as their main business activity while BHP & RIO are resource companies.
To compare apples with apples re debt to Equity:
CBA...340%
ANZ...221%
NAB...245%
WBC..329%
While the IO miners debt to equity is:
RIO...62.13%#
BHP...43.7%
FMG..126.26%
IMO, the most useful way to compare debt is between peers and not across industries.
Further, IMO, if a company is quite profitable now, that debt will only become a significant
if world interest rates rise generally which will put up interest rates on corporate borrowings
and there is no concrete signs of that yet. That said, when there is pressure on margins
every little bit helps including retiring debt and getting rid of interest payments.
While the IO miners, particularly FMG & RIO, are fairly laden with debt, the price of IO
in AUD is the main concern and miners like AGO, MGX & BCI will feel the pinch regardless of debt.
IE: Further Debt to Equity: (IO producers)
AGO: 17.98%
MGX: 0.75% (MGX has almost its market cap in cash yet its SP has been trashed due to margin squeeze)
BCI: 22.2%
Cheers
Moorookamick
# RIO is opening a new IO mine in the Pilbara soon which will see the
seabourne IO supply increase further. The must think that the price of
IO will not drop to $50/ton as some are predicting on these boards
and my guess is that RIO who are very IO dependant should have a
very good handle on world IO prospects for at least the next decade.
IMO, small miners with good resources will be swallowed over the next
few years by the biggies. MM
