Quote from: efreeti on May 12, 2015, 04:37:01 AM

Quote from: aso118 on May 12, 2015, 01:03:55 AM

Quote from: GangkisKhan on May 11, 2015, 04:50:48 PM

If you can borrow at close to 0% rate to do whatever, wouldn't you do the same?

When it is payback time, companies will discover that it is not easy. If there is a stock market meltdown, issuing equity won't be easy. Stockholders won't like companies cutting dividends either.

If the rate is low, there is no reason to pay back. Dividend is always slightly higher than interest rate for a stable company, less equity out there means less dividend to pay.

That is true. Cost of equity is higher than cost of debt. As long as you have stable operations, you can chug along. The problem comes when there is a disruption in the market and you are unable to refinance your debt.