To get
our cost of debt capital down, we want to move towards investment grade metrics.
That said, a lot of the advantage gets erased by a higher
cost of debt capital, which is partly driven by the Fed, and partly by a potentially humongous deficit.
Not exact matches
Important factors that could cause actual results to differ materially from those reflected in such forward - looking statements and that should be considered in evaluating our outlook include, but are not limited to, the following: 1) our ability to continue to grow our business and execute our growth strategy, including the timing, execution, and profitability
of new and maturing programs; 2) our ability to perform our obligations under our new and maturing commercial, business aircraft, and military development programs, and the related recurring production; 3) our ability to accurately estimate and manage performance,
cost, and revenue under our contracts, including our ability to achieve certain
cost reductions with respect to the B787 program; 4) margin pressures and the potential for additional forward losses on new and maturing programs; 5) our ability to accommodate, and the
cost of accommodating, announced increases in the build rates
of certain aircraft; 6) the effect on aircraft demand and build rates
of changing customer preferences for business aircraft, including the effect
of global economic conditions on the business aircraft market and expanding conflicts or political unrest in the Middle East or Asia; 7) customer cancellations or deferrals as a result
of global economic uncertainty or otherwise; 8) the effect
of economic conditions in the industries and markets in which we operate in the U.S. and globally and any changes therein, including fluctuations in foreign currency exchange rates; 9) the success and timely execution
of key milestones such as the receipt
of necessary regulatory approvals, including our ability to obtain in a timely fashion any required regulatory or other third party approvals for the consummation
of our announced acquisition
of Asco, and customer adherence to their announced schedules; 10) our ability to successfully negotiate, or re-negotiate, future pricing under our supply agreements with Boeing and our other customers; 11) our ability to enter into profitable supply arrangements with additional customers; 12) the ability
of all parties to satisfy their performance requirements under existing supply contracts with our two major customers, Boeing and Airbus, and other customers, and the risk
of nonpayment by such customers; 13) any adverse impact on Boeing's and Airbus» production
of aircraft resulting from cancellations, deferrals, or reduced orders by their customers or from labor disputes, domestic or international hostilities, or acts
of terrorism; 14) any adverse impact on the demand for air travel or our operations from the outbreak
of diseases or epidemic or pandemic outbreaks; 15) our ability to avoid or recover from cyber-based or other security attacks, information technology failures, or other disruptions; 16) returns on pension plan assets and the impact
of future discount rate changes on pension obligations; 17) our ability to borrow additional funds or refinance
debt, including our ability to obtain the
debt to finance the purchase price for our announced acquisition
of Asco on favorable terms or at all; 18) competition from commercial aerospace original equipment manufacturers and other aerostructures suppliers; 19) the effect
of governmental laws, such as U.S. export control laws and U.S. and foreign anti-bribery laws such as the Foreign Corrupt Practices Act and the United Kingdom Bribery Act, and environmental laws and agency regulations, both in the U.S. and abroad; 20) the effect
of changes in tax law, such as the effect
of The Tax Cuts and Jobs Act (the «TCJA») that was enacted on December 22, 2017, and changes to the interpretations
of or guidance related thereto, and the Company's ability to accurately calculate and estimate the effect
of such changes; 21) any reduction in our credit ratings; 22) our dependence on our suppliers, as well as the
cost and availability
of raw materials and purchased components; 23) our ability to recruit and retain a critical mass
of highly - skilled employees and our relationships with the unions representing many
of our employees; 24) spending by the U.S. and other governments on defense; 25) the possibility that our cash flows and our credit facility may not be adequate for our additional
capital needs or for payment
of interest on, and principal
of, our indebtedness; 26) our exposure under our revolving credit facility to higher interest payments should interest rates increase substantially; 27) the effectiveness
of any interest rate hedging programs; 28) the effectiveness
of our internal control over financial reporting; 29) the outcome or impact
of ongoing or future litigation, claims, and regulatory actions; 30) exposure to potential product liability and warranty claims; 31) our ability to effectively assess, manage and integrate acquisitions that we pursue, including our ability to successfully integrate the Asco business and generate synergies and other
cost savings; 32) our ability to consummate our announced acquisition
of Asco in a timely matter while avoiding any unexpected
costs, charges, expenses, adverse changes to business relationships and other business disruptions for ourselves and Asco as a result
of the acquisition; 33) our ability to continue selling certain receivables through our supplier financing program; 34) the risks
of doing business internationally, including fluctuations in foreign current exchange rates, impositions
of tariffs or embargoes, compliance with foreign laws, and domestic and foreign government policies; and 35) our ability to complete the proposed accelerated stock repurchase plan, among other things.
United has been bolstered by CEO Oscar Munoz, who has cut
costs by increasing the number
of planes United leases rather than owns, but its
debt - to -
capital ratio, at 77 %, leaves some investors spooked.
It is this lower
cost of capital that should be factored in when calculating the return from taking on
debt.
Weighted average (between
debt and equity)
cost of capital (WACC): This is the firm's true annual
cost to obtain and hold onto the combination
of debt and equity that pays for the fixed asset base.
The combination
of lower -
cost debt capital with higher -
cost equity
capital produces the next item in this list.
Some funds are from
debt (less risky to the creditors, so it has a lower
cost of capital to the firm), and some funds come from equity (more risky to the investors, so these have a higher
cost of capital).
Obviously, besides immediately abandoning its propaganda campaign, the Chinese government should reassure the global business community with concrete, honest, realistic, and market - based solutions that address the underlying pathologies
of China's poor economic performance: massive
debt, endemic overcapacity, and an economic system that channels low -
cost capital into inefficient state - owned enterprises at the expense
of private entrepreneurs and consumers.
Flaherty supports the proposal, arguing in an April letter to his G20 counterparts that embedded contingent
capital would «force the
costs of excessive risk - taking to be removed from taxpayers and placed on to the right people — shareholders and subordinated
debt holders — thus improving market discipline.»
Some examples: in the presence
of full expensing, a corporate rate reduction has no effect on the
cost of capital for equity - financed investments and raises the
cost of capital for
debt - financed investments.
What passed for Soviet Marxism lacked an understanding
of how economic rents and the ensuing high labor
costs affected international prices, or how
debt service and
capital flight affected the currency's exchange rate.
In the presence
of debt finance, textbook analysis would suggest that a cut in the corporate tax rate would raise the
cost of capital because interest deductions would no longer be as valuable and thus discourage investment.
With its flexible financial system and the gradual elimination by the 1970s
of all
capital restrictions, the United States was able quickly to adapt, and began running large trade deficits whose
costs, in the form
of unemployment and consumer
debt, it was willing to absorb for geopolitical advantage, the importance
of which soared during the Cold War.
Put differently, the only way to reduce
debt is to allocate the
cost to some sector
of the economy, and broadly speaking these sectors are the household sector, the private sector, the state sector, and the various more specialized subsectors within these three — for example households can consist
of rich households versus the rest, the state sector can be divided among the central government and the provincial governments, the private sector can consist
of SMEs, large corporations, labor - intensive industries,
capital - intensive industries, the export sector, etc..
What is to stop U.S. banks and their customers from creating $ 1 trillion, $ 10 trillion or even $ 50 trillion on their computer keyboards to buy up all the bonds and stocks in the world, along with all the land and other assets for sale, in the hope
of making
capital gains and pocketing the arbitrage spreads by
debt leveraging at less than 1 % interest
cost?
-- Goethe What is to stop U.S. banks and their customers from creating $ 1 trillion, $ 10 trillion or even $ 50 trillion on their computer keyboards to buy up all the bonds and stocks in the world, along with all the land and other assets for sale, in the hope
of making
capital gains and pocketing the arbitrage spreads by
debt leveraging at less than 1 % interest
cost?
Our strategy is to deploy
capital from any potential source, whether
debt or internally generated cash, depending on the adequacy and availability
of that source
of capital and which source may be used most efficiently and at the lowest
cost at that point in time.
«We are focused on
debt repayment and
capital flexibility, investment in the long - term sustainability
of our core iron - ore assets, creating low -
cost future growth options and delivery
of returns to our shareholders,» the company said in a statement.
The mix
of debt and equity financing that you use will determine your
cost of capital for your business.
John also served as the VP and Head
of Corporate Development for an early - stage renewable energy and feed company based in Florida as well as a Director in Business Development at Valens
Capital, a billion dollar hedge fund focused on providing flexible, custom - tailored and
cost - effective
debt and equity growth financing solutions to small - cap public and private companies.
In addition, rising equity values for Utilities offsets the advantages that cheap
debt has for their
cost of capital.
And along with its quarterly report last week, Whole Foods raised its dividend, approved a massive new $ 1 billion share repurchase program, and unveiled an ambitious new
capital structure designed to take advantage
of attractive
debt markets and reduce the company's overall
cost of capital.
Thanks to STORE's skilled use
of long - term fixed rate
debt, the net cash spread (cash yield minus
cost of capital) generally stays the same, allowing for profitable growth
of AFFO per share and thus the dividend.
Capital Markets Corporate
Debt As Russian companies strive to cope with higher borrowing costs and a shortage of dollars and euros to repay foreign debt, emerging markets bonds are coming under increasing scrutiny by invest
Debt As Russian companies strive to cope with higher borrowing
costs and a shortage
of dollars and euros to repay foreign
debt, emerging markets bonds are coming under increasing scrutiny by invest
debt, emerging markets bonds are coming under increasing scrutiny by investors.
Examples
of these risks, uncertainties and other factors include, but are not limited to the impact
of: adverse general economic and related factors, such as fluctuating or increasing levels
of unemployment, underemployment and the volatility
of fuel prices, declines in the securities and real estate markets, and perceptions
of these conditions that decrease the level
of disposable income
of consumers or consumer confidence; adverse events impacting the security
of travel, such as terrorist acts, armed conflict and threats thereof, acts
of piracy, and other international events; the risks and increased
costs associated with operating internationally; our expansion into and investments in new markets; breaches in data security or other disturbances to our information technology and other networks; the spread
of epidemics and viral outbreaks; adverse incidents involving cruise ships; changes in fuel prices and / or other cruise operating
costs; any impairment
of our tradenames or goodwill; our hedging strategies; our inability to obtain adequate insurance coverage; our substantial indebtedness, including the ability to raise additional
capital to fund our operations, and to generate the necessary amount
of cash to service our existing
debt; restrictions in the agreements governing our indebtedness that limit our flexibility in operating our business; the significant portion
of our assets pledged as collateral under our existing
debt agreements and the ability
of our creditors to accelerate the repayment
of our indebtedness; volatility and disruptions in the global credit and financial markets, which may adversely affect our ability to borrow and could increase our counterparty credit risks, including those under our credit facilities, derivatives, contingent obligations, insurance contracts and new ship progress payment guarantees; fluctuations in foreign currency exchange rates; overcapacity in key markets or globally; our inability to recruit or retain qualified personnel or the loss
of key personnel; future changes relating to how external distribution channels sell and market our cruises; our reliance on third parties to provide hotel management services to certain ships and certain other services; delays in our shipbuilding program and ship repairs, maintenance and refurbishments; future increases in the price
of, or major changes or reduction in, commercial airline services; seasonal variations in passenger fare rates and occupancy levels at different times
of the year; our ability to keep pace with developments in technology; amendments to our collective bargaining agreements for crew members and other employee relation issues; the continued availability
of attractive port destinations; pending or threatened litigation, investigations and enforcement actions; changes involving the tax and environmental regulatory regimes in which we operate; and other factors set forth under «Risk Factors» in our most recently filed Annual Report on Form 10 - K and subsequent filings by the Company with the Securities and Exchange Commission.
When combined with the industry's lowest payout ratio and one
of the strongest balance sheets (ensuring plentiful access to low
cost debt growth
capital), STORE's dividend appears to be on very solid ground, even despite its rather limited dividend track record.
Under the new partnership, Panasonic would foot the
capital costs of solar - panel production — taking the pressure off
debt - riddled SolarCity, which analysts say is in danger
of bankruptcy if it's left to fend for itself.
call for a revision
of the current formula for setting rates which requires rates to be set to fully cover the
cost of operating the system, the
cost of debt service for
capital work and a rental payment to the City
of New York, which is set at 15 %
of the
debt service,
But the bulk
of the spending from the
capital plan would take place over the next few years, according to the proposal, a pace
of spending that surprised some budget watchers and would most likely add to the city's
debt service
costs.
- NCE (net current expenditure): Total district expenditures, including teacher salaries, minus the
cost of capital outlay,
debt service and transportation.
For these projects, the low -
cost capital not only reduces the long - term
costs of project delivery, it provides project sponsors the flexibility
of utilizing innovative delivery methods that would otherwise be prohibitively expensive utilizing taxable long - term
debt.
They have room to take on low -
cost debt to buy back stock, which lowers their
cost of capital and boosts earnings per share, all else being equal.
This proposal would create a
cost structure (including interest rates, fees, and other components) that would generate sufficient revenues for the government to cover its
costs of lending, including its
cost of capital, loan servicing, collection
costs for defaulted loans and any losses due to defaults or other discharge
of the
debt.
Proceeds
of these bonds can be used for expenditures,
debt service reserve funds and
costs of issuing the bonds but not to refinance
capital expenditures, so - called refunding issues.
One component
of the
cost of capital is the
cost of debt financing.
The drop to junk status shows that the company could quickly run into difficulties in paying its
debts, especially as the company will see its
cost of capital increase and its financing options shrink as a result
of the downgrade.
These companies can issue
debt at lower interest rates than their competition and this can significantly lower their
cost of capital.
On the contrary, high
debt companies have to pay high interests and hence have a higher
cost of capital.
If we assume there will be about 8 % charge - offs, that the charge - offs losses are «bad
debt» and therefore short - term
capital losses, and if you're in the 25 % tax bracket, and if we assume your
capital losses will offset
capital gains, then having the investment in an IRA and losing the deductibility
of the short term losses would
cost 2 % (8 % * 25 %)
of tax benefit.
In addition the issuing company has the advantages
of a lower
cost of capital and the ability to get rid
of debt obligations through bond conversions.
It is likely that it would not be able to obtain as much financing in this matter and would either 1) have to rely more on
debt and raise its
cost of capital or 2) obtain less financing overall.
Walsh warned shareholders and employees
of the painful restructuring,
cost reduction & rationalisation still to come, and then began systematically ticking each action item off his list: i) After one last kitchen sink loss in 2012
of EUR 116 million (mostly goodwill impairment), One51 actually recorded a net profit in 2013 for the first time in 7 years, ii) free cash flow increased from just EUR 1.1 million in 2011 to 15.4 million in 2013, iii) almost EUR 100 million was raised in two years from the sale
of the plastic extrusion business, the disposal
of stakes in Island Renewable Energy, Thirdforce, IFG, and (most significantly) Irish Continental Group, in addition to a substantial 2013
capital redemption from NTR, and iv) net
debt (exc.
They recognize the geological uncertainty attached to all resource bodies, the possible political risks, the business risks, the multi - year / decade timescale, the significant
capital / operating
costs, the cash /
debt / share dilution required to fund them, the volatility
of commodity prices, etc..
Again if you plot risk as a %
cost of capital on the y axis and on the x axis the increasing
debt weight, on a absolute basis risk is lowest @ 100 % equity.
This reduced the
cost of capital because it turned equity into
debt, which is a cheaper form
of capital.
If a larger portion
of your balance sheet is low interest
debt your
cost of capital would be decreased.
In a very low interest rate environment, adding low interest
debt to the balance sheet would reduce
cost of capital.
Without loan guarantees, private banks would charge high premiums on
debt to compensate them for the technology and scale - up risks inherent in first -
of - a-kind project — and these
capital costs can ruin project economics.
This historic partnership will exponentially grow the green
debt capital market, thereby driving down the
cost of capital for solar energy projects.