Many people are not optimistic about the banks exiting our stocks at a discount rate of 65% to 80%.
I would think it is a good start. Lets image that hedge funds now owe 1 billions of our debts at an average discounted rate of 75%. So the total debts would be 750 milions with the hedge funds. When a suitor negotiate a takeover deal. It will buy off all our loan and start it all over again with a new loan from its lenders. As a result, suitors are actually paying less for alinta. I am sure that suitors will be able to negotiate a BBIL alike of discounted deal with hedge funds.
Banks are exiting because of their funding cost are going up. They also need money to expand their business. Todays DFOs 450 milions of debt is a good example which banks including NAB are reluctant to extend their loans. Also NAB is eyeing to takeover AXA at this moment..
AEJ Price at posting:
5.5¢ Sentiment: None Disclosure: Held
