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cactipilot
03-24-2020, 05:54 PM
Is this how it all starts....? :(
https://www.barrons.com/articles/s-p-cuts-deltas-credit-rating-to-junk-51585094348


Phuz
03-24-2020, 06:14 PM
Good luck paying the interest on all that debt we carry to "prevent a buyout" (that's not really why)

Management issued debt to inflate EPS through buybacks, making the stock look more attractive and juicing their own Management Incentive Program stock compensation. The shareholders didn't complain because in theory it should have continued to drive the share price higher.

Management, shareholders, and creditors deserve to lose on this one. NOT the taxpayer.

aiir
03-24-2020, 06:45 PM
Management, shareholders, and creditors deserve to lose on this one. NOT the taxpayer.

I agree, too bad they never really lose...


Planetrain
03-24-2020, 07:03 PM
BBB- to BB

Our cost to get new debt just went up.

On the flip side, interest rates can’t get any cheaper (tic). Maybe costs to borrow are about the same as a month ago?

notEnuf
03-24-2020, 10:40 PM
It was dropped 2 levels. While this is a drop from investment to junk,that applies to the future lenders. They just drew 2.6 billion and announced a $50M CURRENT cash bleed. That’s like dropping from 650 to 550 FICO after borrowing just under half your annual income. This is to be expected and why we drew the cash when we did. Had we waited, it would have been more expensive. This really is just telling the next investor there’s been a change. Like FICO scores, you can frame your 800+ and put it on the wall for pride or you can use it to borrow and make productive use of your great to date reputation for paying your bills. If and when you need to use it there’s no point in showing off the score while you are in need of cash. That’s the usefulness of the investment grade rating, insurance effectively.

Phins2right
03-25-2020, 07:38 AM
What are UAL, AAL and SWA rated at? Just curious.

notEnuf
03-25-2020, 07:44 AM
What are UAL, AAL and SWA rated at? Just curious.

Junk, and have been since their bankruptcies and mergers.

Phins2right
03-25-2020, 07:52 AM
Junk, and have been since their bankruptcies and mergers.
Thank you.

4V14T0R
03-25-2020, 07:58 AM
Junk, and have been since their bankruptcies and mergers.


SWA is still investment grade ATM.


Sent from my iPhone using Tapatalk

forgot to bid
03-25-2020, 08:04 AM
The article says S&P Ratings downgrades it properly to junk.

but...
For now, Delta’s more than $7 billion of corporate bonds still qualify as investment grade, since the airline has investment-grade ratings from Moody’s and Fitch. But Moody’s put the company on review for a downgrade last week, and Fitch has a negative outlook on its rating. The company’s stock was up almost 20% despite the downgrade Tuesday.If another credit-ratings firm downgrades Delta’s debt next week, the airline’s bonds will get booted from investment-grade bond indexes at the end of the month.

That could put stress on the high-yield bond market. While Delta already trades like it is junk—even a distressed credit—the junk-bond market has a smaller group of institutions and is more reliant on individual retail investors.



that was in the article