Based on that, many companies have refinanced their floating rate debt into fixed rate loans.
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The levels of fixed-rate debt and floating-rate debt should come down, and the coverage ratios should improve in the next year or two, says General Growth Chief Financial Officer Bernard Freibaum Bernard Freibaum in a conference call with investors today.
The levels of fixed-rate debt and floating-rate debt should come down, and the coverage ratios should improve in the next year or two, says General Growth Chief Financial Officer Bernard Freibaum in a conference call with investors today.
Other options might be high-yield bonds, floating-rate debt, cash, commodities, or real-estate income producing properties.
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The report suggests ways to cut floating-rate debt by scrapping tax-relief on mortgages, for example, or penalising lenders.
On floating-rate debt, the yields can adjust and allow investors to get paid more in a rising-rate environment.
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But still, an all-debt floating-rate purchase does bring back memories of the bad old days of real estate.
The most startling aspect of the proposed deal: Bucksbaum is funding the deal almost entirely by debt, much of it short term and floating rate.
For one thing, it is hard to know how much companies have in fact lengthened the maturity of their debts because the interest-rate swap market allows them to swap those fixed bond payments into cheaper floating debt, a popular strategy in the investment-grade market.
In an effort to obtain loans to service its debt, Seychelles in November 2008 signed a standby arrangement with the IMF that mandated floating the exchange rate, removing foreign exchange controls, cutting government spending, and tightening monetary policy.
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