My question is this. Will the US allow a company as significant as this to fail.
Do some research on the coal industry...
China can meet all of out steel needs, and not ruin our environment. It's a win-win situation. But may not be for the bonds...
Do some research on the coal industry...
China can meet all of out steel needs, and not ruin our environment. It's a win-win situation. But may not be for the bonds...
Personally I'm scared of high yield corporate bonds... Especially if they are adjustable. I think when interest rates start to rise the huge run up on cheap corporate debt over the last few years combined with investors chasing yield (you know... Fund managers and pensions who have to get 7% but be 50% bonds) has made that asset class pretty scary. If interest rates are low and a corporate bond yield is very high and investors are chasing them my guess is they must be overpriced and will eventually fall back to earth.
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The let Lucent go... and later wondered what had happened to the US telcom company when a Chinese one wanted to sell communication systems. I think it is more of a lobbyist question... can the lobbyist convince the government.No I don't feel lucky. I read some research and they are burning a little cash but not too much. My question is this. Will the US allow a company as significant as this to fail. I could see the equity going lower but the debt seems like a decent risk reward given the fact that everything is still perceived as bad and can just get better. But really I don't know the industry.
Any one have an opinion?
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Well, first of all I don't think Chinese manufacturing will be more "earth-friendly" than US manufacturing. Second of all, "offshoring" industries seems fine and good (except for those families affected by layoffs) until we hit some sort of world crisis where an essential commodity isn't being produced by your own nation or a *very* trusted ally. Finally, given the legendary horror stories about the quality and toxicity of so much Chinese manufacturing, it doesn't exactly give me a warm fuzzy.
In the case of steel bankruptcy valuation it's quite simple:
Using those numbers you end up with roughly 0.35 up to 0.55 of book value. Incidently, market value is 0.4 price to book so Mr. Market agrees.
- Inventories, receivables, cash 80% (valued at cost or market, whichever is lower)
- Intangibles 0%
- Deferred income taxes: 0%
- PPE: anywhere from 0% to 50%
Equity is 30% of book value, so a haircut of 20% to 50% can be expected if they do go under. Much has to do whether plants will shutdown (makes em worthless) or can be kept going.