Southwestern Energy (SWN) is buying Montage Resources (MR).
music selection: “Send Me An Angel” — Real Life
On 10JAN2020, I bought the Montage Resources 8.875 coupon bond (CUSIP: 27890GAB6) for 88.7000 cents on the dollar. I bought 8 bonds, paying 15 dollars in commissions and fees and 353.03 in accrued interest. Part of the thesis was that as a small but highly efficient operator in natural gas drilling, the company was a prime acquisition target. This was good for bond holders as the outstanding bond had a buyout provision that required any acquirer to pay off the bond at 101.0000.
My bond shot up to par on the news and I sold today for 100.05, rather than wait for final settlement. I paid 16 dollars in commissions and fees and collected 773.19 in interest over the holding period. That provides 1,297.16 in profit on 7,464.03 outlaid. The trade was in force for 216 days and thus yields 29.37% on an annualized basis.
This was a good return for a very low risk investment. I’ll be looking for a replacement bond opportunity over the next couple weeks.
Devour your prey raptors!