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debts are not a bad thing , as long the debts are to generate income and able to serve the debts , dont understand why everyone so scared of debts..example you earning 10k , your self commitments 5k and you buy investment house for 4k monthly to generate income 3k monthly...is the debt high compare with your income ? yes but you have the asset and recurring 3k rental...so chill guys...be greedy when everyone scared and scared when everyone is greedy...now everyone scared of genting ,so its time to accumulate
debt is not a bad thing but too much debt is really bad. In the case of Genting, its at the borderline without the debt financing for GenM privatization. It has caught the attention of ratings agency and potentially being downgraded. Being downgraded is a big thing - it means higher risk of default and guess what will the banks/lenders ask for in return? higher interest rates for the higher risk of default. and this will lead to higher interest expense / finance cost and lowering pbt/pat. well, of course Genting can then sell Miami land, US listing to pare down the debt. Is the debt being used to increase the value of the company or destroys firm value? And it destroys shareholder value faster as more cash goes to interest payment. We have seen dividend halted and the company did not even start share buyback. SG and MY assets are performing well and I can understand if more capital being allocated to these assets. But US assets - hmmm, the results over the years are not convincing though.
