Ann: Successful Close of 4-Year Senior Unsecured Note Offering, page-20

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19/04/18

14:16

Post #: 32558722
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Originally posted by rastis ↑

Hi Wizardwiegy,
It is true that APT has borrowed a small amount of money at 7.25% PER ANNUM. But it is incorrect if you say that APT makes 4% per annum average from their customers?. APT make 4% for 6 weeks!!. This equates to approx 35% p.a. (excluding late fees). So the margin is good, even at 7.25%?
And importantly, this $50M would have been raised for 'first loss'. That is, the big funders are lending them big amounts at 3% to 4% but they only lend say 90% of the loan book amount. The other 10% is the debt funder (or equity funder) who will lose first if APT fall over and therefore demands a higher rate of return for that risk.
Saying 7.25% is their funding cost would be like saying CBA, NAB's etc funding cost is 5.5% which is what they offer on their big hybrid issues (and they sell home loans at 4%). We know , the banks , like APT have a blend of funders with various risk profiles. The majority of the Banks home loan book is funded much cheaper than the hybrid debt at 5.5%. APT's average debt cost would be sub 4% now I think? and getting lower as they get a bigger loan book. The 7.25% would be what would have been previously funded from equity (shareholders) so this announcement is definitely a positive one for shareholders.
Hope I made some sense?

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Hi Rastis not sure if you read my post above, but their debt funding cost average would not be sub 4%. They're paying 1m BBSW +3% which at the moment would equal 4.88%, and that will rise if RBA increases rates.

See here for latest BBSW rates, at the moment it's 1.88% for 1 month for the buy/sell midpoint:
https://www.asx.com.au/prices/asx-benchmark-rates.htm

I agree with the rest of your points.

@Wizardwiegy take note also

Last edited by upside_down: typo 19/04/18

APT Price at posting: $5.85 Sentiment: Buy Disclosure: Held
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Ann: Successful Close of 4-Year Senior Unsecured Note Offering, page-20

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