Reply to post: Re: €27bn debt. Just let that sink in

Vodafone hacks dividend as it reports €7.6bn losses for FY19

Nick Kew

Re: €27bn debt. Just let that sink in

Corporate debt is just one means of financing a company. People like lending money to companies like Vodafone: it's a better rate of return than putting it in the bank, and a much lower risk than holding shares (today's news cuts the dividend to shareholders, but doesn't affect bondholders).

The fly in the ointment is that the market is distorted by tax anomalies. Loan interest is paid out of untaxed money; dividends are paid out of taxed money. That encourages companies to over-use debt.

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