Average 9.9% Yields With These Short Maturity FX1 Portfolio U.S. Dollar Bonds

by: Randy Durig

Presented below is a summary of the 15 bonds that we have researched, recommended in reviews sent to our clients, and then published on Seeking Alpha over the last 6 months. In the last half year, the yields indicated when these securities were initially added to our FX1, FX2 and/or FX3 Fixed Income portfolios have averaged 9.68%. Thirteen of these global corporate debt instruments were Yankee bonds (foreign corporation debt denominated in US dollars), one was in Swedish krona, and one was in Canadian dollars. Each paragraph details the coupon rate, maturity, CUSIP, credit rating and the yields obtained at the time of acquisition for the FX1, FX2, or FX3 portfolios, as well as giving the business sector and a brief recap of the reason for its selection. Many of the companies hold prominent, dominant, or even monopolistic positioning within their respective countries, and it is not uncommon to find credit ratings that are constrained by a national sovereign credit rating. The following breakdown indicates which portfolio each issue was added to:

14 US dollar notes, averaging 9.9% yield, were added to FX1
16 mixed currency notes (87.5% were USD), averaging 9.68% yield, were added to FX2
2 foreign currency notes, averaging 8.1% yield, were added to FX3

(View the FX1, FX2 and FX3 Portfolio's here.)

When initially added to the FX2 portfolio, the bonds had an average outstanding maturity of about 3.48 years at the average net yield indication of 9.68%. These bonds currently have an average remaining life of about 3.06 years, but this has been skewed shorter due to the anticipated emanate redemption of the 2016 Brigus Gold (BRD) bonds at par. This early redemption will also increase the realized yield of the portfolio, but we are only stating here the yields that were anticipated at the time of purchase of the bonds. Aside from Brigus notes, the remaining 15 bonds added to the FX2 portfolio currently have an average of about 3.26 years remaining.

10.75% Yields With Rolta Yankee Bonds
Issuer: Rolta LLC
Coupon: 10.75
Maturity: 5/16/2018
CUSIP: U77587AA8
Pays: Semi-annually
Rating: BB-
Price: 100.0 (2/18/14)
Yield to Maturity: ~10.75
Portfolios: FX1 and FX2
Intellectual Technology, India
Rolta's Q2-FY-14 Consolidated Revenue Grew 20.9% and Net Profit rose 6.2% Q-o-Q. We think this trend will continue and provide more than adequate interest coverage for these bonds.
More Rolta bond information: 10.75% Rolta LLC

8.23% Yields With 6¾ Year HudBay Yankee Bonds
Issuer: HudBay Minerals (NYSE:HBM)
Coupon: 9.5
Maturity: 10/1/2020
CUSIP: 443628AB8
Pays: Semi-annually
Rating: B3/B-
Price: 104.8 (2/13/14)
Yield to Maturity: ~8.53%
Yield to Worst: ~8.23% (2018)
Portfolios: FX1 and FX2
Diversified Miner, Canada
We think this very seasoned mining company and its experienced management team have successfully designed and implemented a lower risk growth strategy, and believe that it will have little difficulty performing on this debt.
More HudBay Minerals bond information: 8.25% HudBay Minerals

8.81% Yields With 1¾ Year AvangardCo Yankee Bonds
Issuer: AvangardCo IPL (OTC:OTC:AGVDY)
Coupon: 10.0%
Maturity: 10/29/2015
Ratings: B- (Fitch)
CUSIP: M15537AA7
Price: 101.9 (1/14/14)
Yield to Maturity: ~8.81%
Portfolios: FX1 and FX2
Agriculture, Ukraine
As a leading global provider of eggs and egg products from one of Europe's richest farming districts, we think AvangardCo is positioned as a key player within a vital industry. The company's facilities are among the most technologically advanced in the Ukraine, and its revenues and net profit have increased significantly in recent years.
More AvangardCo bond information: 8.8% AvangardCo

9.27% Yields With 3¾ Year Temple Hotel Canadian Dollar Convertibles
Issuer: Temple Hotels (OTC:OTC:TMPHF)
Coupon: 7.25
Maturity: 9/30/2017
CUSIP: 879854AC1
Pays: Semi-annually
Rating: none
Price: 93.65 (12/17/13)
Yield to Maturity: ~9.27%
Portfolios: FX2 and FX3
Hospitality Industry, Canada
We see this company as having established itself as a successful niche player at a critical time in the hospitality industry, and is well poised for continued future growth.
More Temple Hotels debenture information: 9.25% Temple Hotels

9.66% Yields With 3.9 Year Dana Gas Sukuks
Issuer: DanaGas
Coupon: 9.0
Maturity: 10/31/2017
Pays: Quarterly
Rating: NA
Price: 97.875 (12/11/13)
Yield to Maturity: ~9.66%
Portfolios: FX1 and FX2
Oil and Gas Producer, Middle East
As the Middle East's first and leading private-sector regional natural gas company, Dana Gas has proven plus probable reserves of 152 million barrels of oil equivalent and a resource potential of some 900 million barrels from its world class acreage in Egypt and Iraq.
More DanaGas sukuk information: 9.66% Dana Gas

8.45% Yields With 3.2 Year Camposol S.A. Yankee Bonds
Issuer: Camposol S.A. (OTC:OTC:CMPHF)
Coupon: 9.875%
Maturity: 02/02/2017
Pays: Semi-Annual
Ratings: B
Price: 103.9 (11/7/13)
Yield to Maturity: ~8.45%
Portfolios: FX1 and FX2
Agriculture, Peru
Camposol is presently the largest exporter of asparagus in the world and is heading towards becoming the largest producer of avocados on the planet. The company has also planted 531 hectares of sweet pepper, 451 hectares of grapes, 415 hectares of mangos and 101 hectares of mandarin oranges.
More Camposol bond information: 8.45% Camposol

14.38% Yields With 2½ Year Brigus Gold Convertible Yankee Bonds
Issuer: Brigus Gold
Coupon: 6.50%
Maturity: 3/31/2016
Ratings: NA
Price: 84.45 (10/31/13)
Yield to Maturity: 14.38 %
Portfolios: FX1 and FX2
Gold Miner, Canada
The company Primero Mining (NYSE:PPP) is acquiring Brigus Gold and the change of control mandates an offer to redeem the $50 million worth of Brigus convertible notes at par.
More Brigus Gold debenture information: 14.38% Brigus Gold

10.25% Yields With 2 Year Average Life (Sinking) TGS Yankee Bonds
Issuer: Transportadora de Gas del Sur S.A (NYSE:TGS)
Coupon: 7.875%
Maturity: 5/14/2017
Ratings: B3/B-
Price: 95.465 (10/22/13)
Avg.Yield to Avg.Life: ~10.25 % (~2 Years)
Portfolios: FX1 and FX2
Natural Gas Pipelines (monopoly), Argentina
Recent strengthening and rise of Transportadora's stock price has greatly improved the metrics of its balance sheet and diminished the overall risks that we see in its bonds.
More TGS bond information: 10.5% Transportadora de Gas Del Sur

7% Yield to First Call (July 2014), 3¾ Year Diamorph Bonds, in Swedish Krona
Issuer: Diamorph
Coupon: 12.00%
Maturity: 7/6/2017
Ratings: NA
Pays: Semi-annually
Price: 110.50 (10/22/13)
Yield to Maturity: ~8.6%
Yield to Worst (First Call 7/6/14): ~7.0%
Portfolios: FX2 and FX3
Nanotech, Sweden
During the second quarter, a fully subscribed rights issue of 18 million shares was completed. At the end of June 2013, total fixed assets were reported at SEK 707.4 million, with total assets being SEK 942 million.
More Diamorph bond information: 7% YTW Diamorph

10.76% Yields With 2.4 Year Mriya Agro Yankee Bonds
Issuer: Mriya Agro Holding Company
Coupon: 10.95%
Maturity: 03/30/2016
Ratings: B/B-
CUSIP: M70609AA6
Price: 100.40 (10/4/13)
Yield to Maturity: ~10.76 %
Portfolios: FX1 and FX2
Agriculture, Ukraine
Agriculture product prices have substantially outpaced worldwide inflation in the last 5 years, resulting in a significant growth in revenues for Mriya. Total revenues grew 32% year over year from 2011 through 2013, and 21% year over year comparing 1H 2012 with 1H 2013.
More Mriya Agro bond information: 10.76% Mriya Agro

8.25% Yields With 4.4 Year Gajah Tunggal Yankee Bonds
Issuer: Gajah Tunggal (OTCPK:OTCPK:PTGJY)
Coupon: 7.75%
Maturity: 02/06/2018
Ratings: B2/B+
CUSIP: Y71214AA1
Price: 98.185 (9/26/13)
Yield to Maturity: 8.25%
Portfolios: FX1 and FX2
Rubber Tires, Asia
The increase in net income was a 65% increase from the prior 2011.
More Gajah Tunggal bond information: 8.25% Gajah Tunggal

10% Yields With 2 Year Trade & Development Bank of Mongolia Yankee Bonds
Issuer: Trade & Development Bank of Mongolia
Coupon: 8.50%
Maturity: 9/20/2015
Ratings: B1
Price: 97.35 (9/20/13)
Yield to Maturity: 10.0%
Portfolios: FX1 and FX2
Resource Development & Financing, Asia
The bank recently had record earnings and solid growth in deposits and assets, moving it towards one of the largest Mongolian banks by assets.
More TDB of Mongolia bond Information: 10% TDB of Mongolia

9.87% Yields With 3⅔ Year Alto Palermo Yankee Bonds
Issuer: Alto Palermo (NASDAQ:APSA)
Coupon: 7.875%
Maturity: 5/11/2017
Ratings: NR/B
Price: 94 (9/18/13)
Yield to Maturity: 9.87%
Portfolios: FX1 and FX2
Premier Real Estate Properties, South America
Profitable high end malls provided good profits and low debt, with highly value real estate assets.
More Alto Palermo Bond Information: 9.85% Alto Palermo

9.66% Yields With 2⅔ Year Ferrexpo Yankee Bonds
Issuer: Ferrexpo (OTC:OTC:FEEXF)
Coupon: 7.875%
Maturity: 4/07/2016
CUSIP: G34361AA6
Ratings: NR/B
Price: 95.95 (8/23/13)
Yield to Maturity: 9.66%
Portfolios: FX1 and FX2
Steel Industry, Europe
Net income exceeding average. Ferrexpo reduced freight expenses by a whopping 33 percent, which help prompt upgrades.
More Ferrexpo bond information: 9.66 % Ferrexpo

8.4% Yields With 4¾ Year NordGold Yankee Bonds
Issuer: NordGold (OTC:OTC:NGOLY)
Coupon: 6.375%
Maturity: 5/07/2018
CUSIP: N64523AA6
Ratings: Ba3/NR
Price: 92.25 (8/16/13)
Yield to Maturity: 8.4%
Portfolios: FX1 and FX2
Gold, Asia/Africa
Revenues in H1 2013 increased by 17% from H1 2012 to US$617.1 million. The increase was mainly due to higher production volumes and gold sales, but was somewhat offset by lower realized gold prices (down 10%).
More NordGold bond information: 8.4% Yield NordGold

11.22% Yields With 7¼ Year Aeropuertos Argentina 2000 Yankee Bonds
Issuer: Aeropuertos Argentina 2000
Coupon: 10.75%
Maturity: 12/1/2020
Ratings: B3/B-
Price: 98.5 (8/6/13)
Yield to Maturity: 11.22%
Portfolios: FX1 and FX2
Airport Management (monopoly), Argentina
2012 Revenues in Argentine Pesos were up 66% and net income was up 46%. This is a sinking bond where ½ of the principal will have been returned by Oct 2017, therefore it has reduced risks and increased cash flow.
More Aeropuertos Argentina 2000 bond information: 11.22 % Aeropuertos Argentina

The chart below compares the last 14 Yankee Bonds we placed in FX1 with the USD Emerging Markets Bond ETF US (BATS:CEMB) and Total Bond Market ETF (NYSEARCA:BND). This is a relatively small sample of issues that we have reviewed as selected for addition to our fixed income clients, and it is not intended to be a complete comparison that can or should be made. We focus more on short "maturity certain" bonds cycles when interest rates are climbing. By making comparisons in several categories, such as indicated yields and projected costs, it becomes much easier to see why this approach to fixed income investing is so attractive. Considering that we have successfully steered clear of any bond defaults with this high yield, high cash flow, short maturity model, it's also easy to understand why most of our bonds selections are simply held to maturity (or to redemption, if called.)


Yield to Maturity


Average Maturity

iShares Emerging Markets Corporate Bond



7.59 years

Total Bond Market ETF

2.47 %


7.5 years

Fixed Income 1 portfolio



3.25 years

Fixed Income 1 compared to the best.

The last 14 USD bonds added to FX1 offer over twice the yield of the iShares emerging corporate bond ETF.

The FX1 portfolio issues cost estimates are 40 basis points more than the very low cost BND ETF.

Average maturity/life of the last 14 Fixed-Income1.com bonds average maturity is less than half that of the shorter BND ETF

Click to enlarge

*This is a proposed cost only.

We hope you enjoy our high income approach.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.