Q: Hi team,
What do you think of Gsy’s note offering priced at 9.25%. This is a shocker rate to me. Is this why the stock is down on a great market day today ? Despite this, Mr. Mullens did add that this was already priced in their future outlook in regards to growth targets. If all their debt is going to go from 5%-9% range though this sounds concerning does it not ?
Thanks ,
Shane
What do you think of Gsy’s note offering priced at 9.25%. This is a shocker rate to me. Is this why the stock is down on a great market day today ? Despite this, Mr. Mullens did add that this was already priced in their future outlook in regards to growth targets. If all their debt is going to go from 5%-9% range though this sounds concerning does it not ?
Thanks ,
Shane
5i Research Answer:
The yield required to sell the notes was higher than expected, and did likely attribute to the stock's decline. Bond buyers are worried about the Canadian economy. But, GSY has also tightened its lending criteria, and its ratio of secured lending to unsecured is now 41%. Also, charge offs have declined. If GSY can manage charge offs and losses, it should still be able to adapt to higher rates. Its earnings in the 3Q were a record.