will kerry pay back on sevpc?, page-2

You've raised good questions about SEVPC.

I've bought a small position of SEVPC, because it does pay 2.5% higher than BBSW, and SEVEN has the cash reserve and retained earnings to pay out preference dividends, even when operating profits are down when recession arrives.

But I do not like to fall in love with what I own. SEVPC is still risky. Its payments are safe only if Stokes refrains from wasting more cash on WAN, or even APN. And as you said, he has no SEVPC, so he clearly has no incentives to maximise returns for SEVPC holders.

Cost of SEVPC is already falling as RBA keeps cuttings interest rate. There is a real possibility that in May 2010, Sokes will find it cheap to simply pay the step up rate.