Diligent,
Good point. The effects of lower US interest rates may actually cancel out the additional risk premium demanded by US lenders. In Australia, I suspect they will have to pay a higher rate because of both risk and rising interest rates.
I have run the numbers taking what I consider to be an absolute worst case scenario: 200bp increase in the US and 240bp increase in Australia. In effect double what the company themselves said the increase would be. This comes out at around a 6c per share impact.
(In effect, this would be like me going to my bank and offering to 9.7% instead of 7.3% on my mortgage)
Added to this is the cost of the "$40m of anticipated upfront one off refinancing costs asspciated with the current debt restructure" (p8 of the Centro presentation 17/12/07), which amounts to a one-off 4.73c per share in 2008.
So, aside from any other impacts, worst case increased interest and debt restructuring costs amount to 10.73c per share impact in year 1 and 6c per share for years 2 onwards. This would bring distributions down to just over 30c per share for 2008.
Not bad for a 54c SP.
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