rhg will be the biggest performer today, page-10

well the point is they dont want to finance at rates currently on offer - they could do what ANZ and GE capital did last week (raising 1b on 3 yr fixed rate notes at 42bp above LIBOR). Each bp above 12bp (RHG rate pre credit crunch) costs 100k per 1b of loan book. So at current rates, which rams sees as too high, rams could look to refinance at 30bp above prospectus - hitting the bottom line to the tune of 3m per 1b of loan book. Based on current XCP of 6b this would amount to 18m knocked of FY08 prospectus NPAT of 58.6m. Even if you include warehouse funding this only blows out to NPAT decrease of 30m of prospectus which gives NPAT FY08 over 28m. Which equates to a minimum of 8cps.

This is a current worst case scenario based on rates of funding that RHG is not prepared to take. With the LIBOR spread starting to fall, I fully expect rams will be able to get better terms than this in the next few months and hence have a NPAT well above this