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Friday, 24 February 2012

Why more corporations selling bonds or perpetual securities???

Just for Thinking ....

Read? Insurance, Leverage, and Peace of mind.

May be the banks are thinking that these corporations are too risky to lend them more money. The corporations have no better choice but to borrow money from the stock market through bonds or perpetual  securities by offering "attractive" interest payment to lenders in the current ultra low interest rate environment. It is damn "attractive".

Banks are not lending more money directly to these corporations. But I heard some "clever" retail investors were borrowing directly from the banks and then lent their borrowed money to these corporations by leveraging on the bank loans to buy these bonds or perpetual securities to earn the differences by taking on the risks which are deemed too high by the bankers.

The bankers are in the business of lending and they are not doing it. Are you thinking it loud?

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