High risk? Properties were not seen as high risk until recently - now they are if you loaned a lot of money and cannot pay the interest. Centro have been paying their interest bill, but the banks don't want to refinance Centro loans because the BANKS can't get money at low rates anymore and besides, they need to shore up THEIR own balance sheets due to bad loans (ppl not paying their bills), etc.
It never ceases to amaze me that ppl look at Centro and see a dog, where in fact it is the BANKS that are the dogs - yapping at the heels of any business to get their money back because THEY screwed up (or their brethren did, same thing), not the business that is keeping up repayments.
Of course Centro screwed up too, firstly it took on more than it could safely manage (blame AS, now conveniently gone) and secondly, they failed to refinance when they could have (trying to save a buck at the wrong time - and yes, AS is the culprit again). But to say that Centro has failed to pay its bills is codswallop.
BTW, the above is at the root of the current situation with the banks. If they cannot get their act together in this situation with so much at stake and where the customer is paying its bills, then closure (administration) is not an option, since the possible losses (in a property market with vultures hovering overhead) will certainly be worse than supporting the paying customer. Hence many commentators have said the banks have little choice than to support Centro - and that why I believe that Centro will get another extension - however, the world has got a little more complicated in the last month so in true aussie fashion I threw a coin to be sure and Centro came up heads.
PS: Please lets not quibble over technicalities, if there are covenants that govern these things, the bottom line is whether or not the customer can pay, not whether some parameters show that technically they are in breach of some agreement.
CNP Price at posting:
7.7¢ Sentiment: Hold Disclosure: Not Held
