Today I’m detailing my bond positions and the stink bids I have out for more bonds.

music selection:  “No Matter What” — Badfinger

First up is the bonds I’ve already purchased.  I’m a little overweight in “C” grade bonds and hope to get more stink bids out on “B” grade bonds next week.  Annualized yield is a weight average estimate of the return of capital assuming normal default rates and normal recovery rates, plus the coupon yield over cost.

Date Ticker What Grade Expiry Coupon Price Annualized
08-Dec-15 BBEP Breitburn Energy C 15-Oct-20    8.625 28.263  81%
19-Nov-15 BTU Peabody Coal C 15-Nov-18    6.000 20.500  133%
08-Dec-15 CLF Cliffs nat res C 15-Jan-18    5.950 29.538  107%
07-Dec-15 EAC Erikson B 01-May-20    8.250 60.500  28%
08-Dec-15 LINE Linn Energy C 15-May-19    6.500 23.000  122%
17-Nov-15 NOR Noranda Aluminum C 01-Jun-19 11.000 20.500  141%
20-Nov-15 NRP Natural Res Partners B 01-Oct-18    9.125 68.000  29%
07-Dec-15 SGMS Scientific Games B 15-Sep-18    8.125 79.000  19%
08-Dec-15 SSE Chesapeake C 15-Nov-19    6.625 36.550  60%
20-Nov-15 VNR Vanguard B 01-Apr-20    7.875 55.000  26%
08-Dec-15 X US Steel B 01-Feb-18    7.000 63.000  36%
Weighted Average Annualized Return (Estimate) 49.7%

I have some stink bids open on a few more “C” rated bonds that are not clearing.  I’ll add more stink bids to “B” rated bonds next week.

Ticker What Grade Expiry Coupon Bid
CMLS cummulus radio C 01-May-19    7.750 33.150
EXXI energy xxi C 15-Feb-18    8.250 25.000
IHRT iheart clear channel C 15-Jan-18 10.000 30.600
MPO midstates petroleum C 01-Oct-20 10.750 13.600
REXX rex energy C 01-Dec-20    8.875 20.400

I have no estimated return for these as I need an open date to calculate such.

I’ll get these added to the open positions tab shortly.

Devour your prey raptors!

 

 

 

Current Discounted Bond Positions

Never miss another opportunity to devour prey!

2 thoughts on “Current Discounted Bond Positions

  • December 10, 2015 at 3:45 pm
    Permalink

    Given the deteriorating balance sheets, liquidity and cashflow positions of several of the C rated companies, how did you make your investment decision on which bonds to purchase?

    Thanks

    Rob

    Reply
    • December 10, 2015 at 3:55 pm
      Permalink

      Robert,

      It is more art than science. First I look to see if there is interest coverage from cash flows (even 1x gives me comfort). Else, I try to learn about their assets and determine if the collateral has value. Chesapeake is a good example of that. They may not continue to have sufficient cash flow but their assets are the best in the business. Buyers can be found. Assets can be spun off and loaded with some of the debt in the process. And they can dilute shareholders to raise cash.

      But I want to be at least half B rated companies. I’m already there on a weighted average cost basis but I want to be there on an issue count basis as well. The C rated companies are still a great bargain under 40 cents but bankruptcies can take time, which ties up capital into non performing assets.

      Reply

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