Originally Posted by
Excargodog
And no, $17.9 Billion in liquidity does NOT mean they have $17.9 billion sitting around to pay off these bonds, it means that they can come up with that much cash if they have to, but usually only by tapping a line of credit that will have debt service rates likely just as high as that of the bonds - probably higher. That’s just robbing a different Peter to pay Paul, it doesn’t make the debt go away.
I believe AAG does have that amount "sitting around" and do not need to tap into a line of credit to do so. They list almost 15 billion in short term investments and just under a billion in restricted cash.
The short term problem they have is that 19.2 billion of current assets is pretty much spoken for, since they have 18.9 billion in current liabilities. So they will have to refinance the older debt that they got with much lower rates than what they currently can borrow. Burning through the 19 billion in liquidity only pays down 2.5 billion of debt. They still have 36 billion of long term debt left after that.
They keep saying they will pay down 15 billion in the next 4 years, they just do not have the cashflow to do right now and they need to pull some rabbits out of a hat to successfully do so. I am excited to see how they manage this.