Retirement of debt

Gfclappah · July 16, 2020, 5:16pm

Why is retirement of debt positive in cash flow, surely your paying your debt off so it’s cash out, or is it savings on interest? I’m confused because I’ve been looking at Babcock and their cashflow looks good but it’s mainly made up of retirement of debt

Matt_C · July 17, 2020, 2:42pm

Was it bond issues where the price of the bonds below issuing price? That can cause a gain instead of a loss…

Briscoe · July 17, 2020, 4:09pm

I might be wrong here but it’s

Issuance (retirement) of debt.

I believe this means issuance is + and (retirement) is -

I’m guessing Babcock took on debt this year?

That’s just me looking at it for less than 30secs.

I’ll check back again in a bit.

Alien · July 17, 2020, 4:16pm

My understanding is, when debt is retired, the money in the sinking fund becomes available, which adds to the cash flow.

Gfclappah · July 17, 2020, 4:24pm

I don’t get it.

If debt is retired then you’d need money to come out of somewhere. It just shows as a positive.

Gfclappah · July 17, 2020, 4:28pm

Basically it’s a cumulative figure for debt.

. Looks like Babcock have taken on a big loan.

Alien · July 17, 2020, 4:36pm

This is issuance - retirement net.

Matt_C · July 17, 2020, 4:33pm

They issued new bonds set to mature in 2027

Gfclappah · July 17, 2020, 5:00pm

Thanks all, makes sense