Saw this nugget buried in a recent earnings call of Wynn Resorts Management. This is Steve Wynn responding to a caller question:
Well, we finished our financing recently. The last tranche was a $750,000 – $750 million bond. We sold it at 5.09 with no covenants nonrecourse to the parent. And that brought our total financing for Cotai to $3,850,000,000 at an average cost of 3.3%. Or to put it another way, we rented the $3.85 billion for $125 million.
Now on one hand, as a businessman, I’m thrilled. Never dreamt that we would see anything so tasty and wonderful as that. On the other hand, it’s a reflection of questionable fiscal and monetary policy in the United States that is artificially depressed interest rates because of quantitative easing by the Fed, which is also sort of killing the value of the dollar and the living standard of the working people.
So the good news is, if you’re a high-class borrower with good credit rating, this is one of the most tastiest seasons of all time for 2 reasons. You’re borrowing money at artificially depressed rates. And you’re most likely going to pay them back with 85-cent dollars.
It’s a perfect storm for a businessperson unless you look at the truth of the matter and the impact it has on your customers and your employees. And that’s a much darker story. It doesn’t lend itself to a soundbite, but it’s – for every businessman in America and any economist that has their heads screwed on right, it’s an ominous situation.
But in terms of our moment in history, in commercial history and our projects in Cotai, along with our colleagues in the industry, it’s nirvana. Capital structure now is – these are mostly at the Venetian and the Wynn, things of beauty. They’re lovely, better than you could ever want. I mean, they’ve got everything, low interest rates, long maturities, low covenants. What else do you want? I mean, it’s great.
If you look at it from our point of view, look at it from a consumers’ point of view or a working person’s point of view, who’s paying for all this cheap money? Well, right now, the Fed is. I thought Bernie Madoff went to jail for that. But anyway, that’s my answer about your capital structure.