Companies with
variable/floating-rate debt are more immediately impacted (negatively) by a
rate hike than companies with fixed rate debt.
It's easy to
understand that a corporate with high debt and rising rates should lose
earnings in the end. Attached you can find a list of companies that may lose
values due to a soon rate hike.
I'm not a fan of
highly leveraged companies. I know the hefty disadvantages from a debt burden
but sometimes there could be some advantages appear. Just remember the tax
benefits you should gain or return boosts due to a higher leverage.
Also interesting was the
development from ABInbev. Those shares fall like a stone during the financial
crisis in 2008/2009. After the freefall, when they found their bottom, they
created massive values for investors with risk appetite.
It’s not always bad to invest into
companies with a high leverage. You must consider each investment isolated.
Sometimes, when the underlying
business is stable, you should find a real investment opportunity.
Attached is a small list of stocks that may offer a higher risk when the rates start to rise.
Here is the list...Attached is a small list of stocks that may offer a higher risk when the rates start to rise.
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| source: WSJ, Barrons.com |