Big companies and debt/liabilities borrowing rates

[NuckyThompson]

With perspective interest rate rises in America and UK how do these affect the big oil companies for example?

I have shares in a company with approx. $10bn liabilities, they have been massively reducing this liability in the past few years though. And they're making about $1bn a quarter at present.

How do these big companies take out loans? Are they at fixed rates or do they have some level of variability to them?

Just wondering if perspective interest rates will hit their share price despite posting record profits and likely to do again in the next quarter.

[BorkBorkBork]

I’m assuming a lot of it will be by issuing corporate bonds, here’s an example:

https://www.shell.com/investors/debt-information/o...

[NuckyThompson]

BorkBorkBork said:

I’m assuming a lot of it will be by issuing corporate bonds, here’s an example:

https://www.shell.com/investors/debt-information/o...

So their borrowings tend to be at a fixed rate then rather than having any variable aspect to the interest payments?

I'm guessing the fear in the market is what future rates these companies will be able to obtain borrowing at?

The most recent borrowing $4bn taking out by the company concerned represents 40% of their obligations. They sate that this was taken out because of favourable borrowing rates so I'm guessing that 40% of their liabilities are at a low rate.

I'm hovering over the sell button but expecting big 3rd quarter results again in October, Although there was no movement in their price on record 2nd quarter results. but this did coincide with scaremongering by Biden, interest hikes and the American 2nd consecutive quarter of recession.

[LooneyTunes]

NuckyThompson said:

So their borrowings tend to be at a fixed rate then rather than having any variable aspect to the interest payments?

Large corporates will adopt a blended strategy where they have a combination of short and long term debt, using a range of different funding mechanisms. Some of these will be fixed rate but some will be variable, usually on the basis of a "LIBOR +" arrangement.

[BorkBorkBork]

NuckyThompson said:

BorkBorkBork said:

I’m assuming a lot of it will be by issuing corporate bonds, here’s an example:

https://www.shell.com/investors/debt-information/o...

So their borrowings tend to be at a fixed rate then rather than having any variable aspect to the interest payments?

I'm guessing the fear in the market is what future rates these companies will be able to obtain borrowing at?

The most recent borrowing $4bn taking out by the company concerned represents 40% of their obligations. They sate that this was taken out because of favourable borrowing rates so I'm guessing that 40% of their liabilities are at a low rate.

I'm hovering over the sell button but expecting big 3rd quarter results again in October, Although there was no movement in their price on record 2nd quarter results. but this did coincide with scaremongering by Biden, interest hikes and the American 2nd consecutive quarter of recession.

As interest rates go up, any new bonds issued will have to have greater yields, so any new borrowing will be obviously more expensive.

As regards profits, if we’re heading for a global recession, which seems likely after what the fed said yesterday, then demand for energy will inevitably decrease. So, earnings might look good at the moment, but you have to assume these are priced in. If we see a global slowdown, then future earnings may shrink significantly.

[ooid]

You can check their latest annual report and see all info under balance sheet/liabilities. Assuming it is a listed company, they will have to demonstrate all liabilities (bonds, borrowing facilities and etc..)with specific rates and mature dates.

A big part of many analysts job is actually go through loads of info on balance sheet along liabilities to predict share price. You can see some analysts forecast and recommendations on FT.Com and S&P500, and buy the research too for further deep research on a particular listed company.

[NuckyThompson]

ooid said:

You can check their latest annual report and see all info under balance sheet/liabilities. Assuming it is a listed company, they will have to demonstrate all liabilities (bonds, borrowing facilities and etc..)with specific rates and mature dates.

A big part of many analysts job is actually go through loads of info on balance sheet along liabilities to predict share price. You can see some analysts forecast and recommendations on FT.Com and S&P500, and buy the research too for further deep research on a particular listed company.

Thank you, I have been checking their financials, they've been actively reducing liabilities and undertaking a decent amount of share buy back the last year or 2. I'm wondering to put a sell order limit on just to protect myself although im hoping they climb back up towards their recent peak which is about 20% higher than current price.

[2 GKC]

I think you mean prospective not perspective