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[jimp]

How can anyone pay 15% to borrow money and stay in business very long, that's a Guido loan.


There goes the div.

It was probably good news that Harley-Davidson Inc. (NYSE: HOG) was able to raise capital by selling an offering of $600 million of senior unsecured notes. The company noted that this was in its plan to fund the ongoing motorcycle lending activities of Harley-Davidson Financial Services. But what is interesting is that Warren Buffett's Berkshire Hathaway, Inc. (NYSE: BRK-A) is one of the investors in the debt offering.
Davis Selected Advisers, L.P. has been a long-time investor in Harley-Davidson and is the largest holder of Harley-Davidson's common stock. Davis and Berkshire Hathaway each committed to purchase equal portions of the principal amount of the notes. After looking through Buffett's full equity holdings, this is a new position for the Berkshire family. It is debt rather than equity, but that is also a more senior position and with a super-high annual rate.
The notes are five year notes due in 2014 and will have a rather high interest rate. The press release says these notes will have 15% annual rates.

http://www.marketwatch.com/news/story/story.aspx?guid=%7Bb4521146-8486-4eb1-9960-728f823e1a85%7D&link=http://www.247wallst.com/2009/02/warren-buffet-1.html

[Keats]

Not for long or unitl inflation takes hold and 15% will start to look good.

You have to remember back in the early 80's mortgage rates were anywhere from 13% - 17%

That is coming back eventually.

The Guido loan would be 15% per week though, it is the penalties that you cannot live with.

[karl]

I can remember 12.5% mortgage rates....  talk about bringing things to a screeching halt.  Fortunately it's an unlikely scenario.

[spydglide]

that's what Buffett got from GE and the MoCo.  That's why he's got all the gold.  har!  spyder

[TN]

Not for long or unitl inflation takes hold and 15% will start to look good.

You have to remember back in the early 80's mortgage rates were anywhere from 13% - 17%

That is coming back eventually.

The Guido loan would be 15% per week though, it is the penalties that you cannot live with.

dang, they cap me at 10% here.


TN

[GC_Super]

I bought my first house in 1985 @ 14.5%.  It was scary, but if you didn't have the cash, that's all you could do. I don't remember when, but we re-fied at some where around 8% for 15 years and still lowered our payment from our original 30 yr note.

[Talon]

I can remember 21% mortgages back in early 80's, we got our first house owner financed at 13%, we though we got a good deal.

[FUZZNUTS]

My first house in 1982, 12.5%. $40,000 ........................

[grc]

How can anyone pay 15% to borrow money and stay in business very long, that's a Guido loan.


There goes the div.



http://www.marketwatch.com/news/story/story.aspx?guid=%7Bb4521146-8486-4eb1-9960-728f823e1a85%7D&link=http://www.247wallst.com/2009/02/warren-buffet-1.html

"The company noted that this was in its plan to fund the ongoing motorcycle lending activities of Harley-Davidson Financial Services."

Hmmmmm.  They pay 15% for capital to fund motorcycle lending activities.  Does that mean they will be charging 20% and up for motorcycle loans?  It sure doesn't sound like a recipe to improve sales to me.

Jerry

[Gone Fishin']

"The company noted that this was in its plan to fund the ongoing motorcycle lending activities of Harley-Davidson Financial Services."

Hmmmmm.  They pay 15% for capital to fund motorcycle lending activities.  Does that mean they will be charging 20% and up for motorcycle loans?  It sure doesn't sound like a recipe to improve sales to me.

Jerry

Well, the way it works is slightly more complicated. First of all H-D needs cash put into financial services, since no lending can take place without cash (situation prior to the $600m infusion). Then the interest rate will be calculated to drive customers into the dealers, let's say around eight to nine pct., depending on the qualification of the buyer. The difference to the 15% is "cost of doing business" or "marketing expense". The other option would be to reduce the bikes purchases prices or introduce cash-back rebates and such. Way more costly, and it will stick, which means these will be hard to discontinue in different times. The cash infusion into financial services is a good lifeline for now.

Ride safely,
Louis

[jimp]

Did Eaglemark receive any TARP funds, I believe they applied.