Two Million Dollar discussed on Slate Money

Slate Money
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Automatic TRANSCRIPT

Mm contracts that is a classic duration mismatch that should scare you a little bit and so part of the reason we're talking about this as they did just come this week to market with it was sized up to a seven hundred and two million dollar sure that it was five hundred million and then there was a lot of demand so they increased to seven hundred wait no seven hundred two million seven hundred two on on that is odd the the two is definitely whiteley seven fifty i could understand yeah yeah that is that is odd so so the interesting thing to me here is not while there are a lot of interesting things here we're gonna this is the we are going to be getting into the income statement we're going into the balance sheet right now so but this story if you're talking about the debt story of why people would buy these bonds the reason they're buying these bonds is that the debt story is fueled by the equity story that this company is free cash flow negative so you would think like why on earth would creditor wanna buy this well two reasons one is because there's a seven seventy coupon on it and if you look at where similarly rated credits are like a single be raising deep into junk it is but but that is you're getting a bigger spread they knew nor so right now the spread between like high yield and treasuries has shrunk so you're actually getting some additional yield you are paying for the risk so the key here is that if your credit you're saying well i know that this company like is not generating cash.

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