FSL has released its Q3 results. All in all, the trust has survived the threats from banks. However from its recent Q3 results, it seems there has been some damage to the company.

Higher Financing Cost

Reading its latest Q3 reports, it seems the new bank loans have a higher margin than the old loans interest of (2.8%+ LIBOR). The new loan arraignments have a weighted average of (4.012% + LIBOR). This means as of now the loan’s interest rates are about 6.55%. This is quite high and will definitely affect my previous valuation of FSL.

Coupled with the refinanced 7% convertible loan, it is undeniable financing cost has risen. In my view with the Fed still likely to raise interest, I may have to assume that FSL will have to pay about 7.5-8% for its loan refinancing. After all most of its loans are floating rates …