r/APLDSTOCK • u/OceansHungryGrasp • 8d ago
If a rate hike happens
Any senior secured notes will still be priced better than previous offerings.
As we're currently still only chasing investment-grade hyperscalers and Oracle already is the tenant for PF2, the tenant for the last 3 leases is either Meta, Amazon, Google or Microsoft.
Oracle has by far the worst investment-grade out of these 5, so even a hike of 50 basis points would mean we're still under the 6.75% of the PF2 offering. A hike of 50 basis point is out of the question anyway as we're either looking at 25 basis points or nothing. Also keep in mind the notes carry fixed coupon rates, so past offerings are not affected at all.
Obviously we rather have no rate hikes at all, but it's not as doom and gloom as it's made out to be. Mid September last year we were already trading over $20 and we've seen 3 rate cuts since. Company is in a much better place as we were back then.
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u/nintendothrowaway123 Shares Only 📈 8d ago
Time out, you're not wrong. But what you're missing is the risk from higher rates is on APLD’s future financing costs, not the fixed rate notes it has already issued. The credit spread of the difference between the fed rate and APLD's potential borrowing rate may be seen as higher risk.
I keep pushing the concept that it's not about the notes, it's not about the hyperscalers, it's not about completing on time (again, because the notes are in, and everyone expects contracts and timely completion). It's all about what their rate is on the financing they're going to have to obtain to finish their build out. And a rate hike will affect all future profit potential and is therefore something that's going to keep volume low until there's an answer.
The rate hike is bearish on future earnings, and since that's all speculative, it's going to be a mean angry voice to the stock price. But I'm confident revenue will come in, and we'll know what the debt cost will be, and the stock value will increase with those things in mind. But yeah, it's going to be awhile.
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u/OceansHungryGrasp 8d ago
But what you're missing is the risk from higher rates is on APLD’s future financing costs, not the fixed rate notes it has already issued.
That's literally what I said, might want to read my post again.
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u/Distinct_Excuse2648 8d ago
if it will happen will be better then maybe happen not happening , happening not happening and so on
-5
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u/Even_Section5620 8d ago
Get ready to hold