Why would Co take a $5bn loan when it enjoys ~$10bn on a balance sheet, even in current environment?
Yes the interest rates a super low, however, what happens is Co losses its purchasing power on its $10bn to inflation, while paying 2.4% interest on $5bn loan. How is this even remotely responsible or rational? Company basically chooses to pay 2.4% interest on $5bn instead of receiving 0.4% interest on half of its cash in short term investment.
Numbers are based on real, well known Co w $200b+ MC.
Submitted November 07, 2021 at 11:09AM by VonDerBerg https://ift.tt/3CV1Nhc
