In a recent article of mine, Modeling The Value of Cooper Tire, I provided an investment overview highlighting the valuation metrics and growth prospects that make Cooper Tires & Rubber Co (NYSE:CTB) an appealing long-term play.
As covered in my article, CTB is a highly profitable company that has exhibited strong growth of the past decade. In addition, as a firm CTB is not highly leveraged, making it less acceptable to be adversely affected by business risks. CTB has adequate capital structure for the industry in which it operates and continues to decrease its long-term debt outstanding with timely payments.
As covered in my article, I mentioned CTB debt consists of a line of credit which was recently extended until 2014 and two bonds outstanding. This article provides a brief overview of these bonds and highlights the key attributes relevant to the bonds' future performance.
Bond #1 - CUSIP: 216831AE7
The first bond I will discuss is CTB's unsecured corporate note with the earliest maturity date of 12/15/2019. This issuance provides investors with a fixed-rate coupon of 8% and is currently going for 112.750 cents on the dollar. The current yield-to-maturity on the bond is 5.742%. The bond is non-callable and distributes its interest payments on a semi-annual basis. The bond was originally issued at the price of 98.135 in 1999.
Bond #2 - CUSIP: 216831ABE
This next bonds varies slightly in its structure. For one, its fixed-rate coupon payment is only 7.625%, however its yield-to-maturity is higher at 6.83%. In addition, this bond is non-callable and distributes its interest payments on a semi-annual basis as well. The primary difference is this bond does not mature until 3/15/2027, which offers a much longer investment horizon than the bond above. Currently, in the market this bond is going for 107.1 cents on the dollar.
CTB is a profitable company that has the ability to pay its debt holders. And another positive sign is its EBIT to interest coverage ratio that is sufficiently high to enhance its ability to cover interest payments. CTB's bonds both have stable rating by Moody's and S&P.
In conclusion, for investors who are more risk adverse and/or seeking diversification through corporate notes, CTB provides a feasible investment opportunity through its fixed income securities.