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Now There’s Another Land Mine For Junk-Bond Investors

FYI: Creative accounting: It’s not just for Silicon Valley start-ups anymore.

The trend has made its way into leveraged finance, which is notable because bond investors usually couldn’t care less about a company’s story—they just want to know whether it will be able to pay them back. One metric that is widely used to evaluate a borrower’s ability to make debt payments is the ratio of its debt to Ebitda, or earnings before interest, tax, depreciation, and amortization.
Regards,
Ted
https://www.barrons.com/articles/ebitda-junk-bonds-1538087064

Comments

  • Another subscription based read ...
  • edited September 2018
    Grant goes into the nuts(!) and bolts of this.



    Prices--

    Average prices charged by private sector firms increased at the sharpest rate seen in the nine-year survey history. Service providers signalled a particularly steep rise in output charges in September, which they commonly attributed to the pass through of higher labor costs and increased prices for inputs sourced from abroad.
    Manufacturers widely noted that trade tariffs had led to higher prices for metals and encouraged the forward purchasing of materials. Some firms commented that higher demand and resilient order books had helped them to offset squeezed margins by pushing up output charges.

    https://www.markiteconomics.com/Public/Home/PressRelease/97fb3daa507944cba1740664bfc20257

    I heard it here first. And see it at the grocery store.


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