actually touted rising interest rates as boosting profits, as interest earned on cash and derivatives more than covered payments.The REITs endured the biggest increases with Dexus’ debt cost jumping by 1 per cent and Mirvac by 1.3 per cent. Fletcher Building has fixed 60 per cent of its outstanding debt but still endured a 50 basis point increase over the half to 5.7 per cent.are well known to the market.
That carry trade is a reminder that lending and borrowing is a zero-sum game. While experts say investment grade debt is an attractive asset class, that can only mean that investment grade companies are being forced to fork out for less attractive rates that will weigh on their margins. “The revenue guidance has been fine and highlights macro resilience. But operating costs are impeding free cash flow,” he wrote. “We think more broadly a slower revenue growth backdrop means that operational leverage is working against Australia Inc.
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