Hyflux: Qns to ask?

In Infrastructure on 19/04/2011 at 12:23 pm

Why is Hyflux willing to pay out dividends of 6% per annum on the pref shares when it can borrow at 3.85% annum? This is a premium of 56%.

Is it lowering its debt to equity ratio from 75% to 25%, only to raise it again in the near future? If it does this would affect the risk premium of the preference share in future, thereby affecting its yield.

Six per cent is a gd rate but think of the risks which includes projects in the Middle East.


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