Wednesday, January 16, 2013

The Long View: Raising Money

One of the few consolations of getting older is that you can take the long view. Was listening to the excellent Bill Rochelle this week predicting that there won't be many corporate bankruptcies this year, and why?--hah, glad you asked. Easy money.  Interest rates are so low and capital so plentiful that almost anybody can (re)finance at a sustainable rate.

Makes sense to me but I find my mind rolling back to the 80s when my friends would tell me about how the CFO would ring up and say I can't make my interest payments, we'll just have to talk Chapter 11. But then a few days later: forget it, no need for 11, the investment bankers tell us we can raise the money we need by issuing equity. I.e., unsustainable with senior debt (too expensive) but doable with junior equity (comparatively cheap).

What goes around comes around. And goes around again.

No comments: