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  • Peabody Energy's Restructuring Plan Could Be Announced After VEBA Issue Is Resolved [View article]
    A couple thoughts:

    In prior articles I wrote that the company cannot be bought out because of change in control covenants in certain notes that give the noteholder the right to have their notes redeem just above par. (These notes currently sell at an extreme discount to par.)

    Consider the language of the covenant: Upon the occurrence of a Change of Control Triggering Event...“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Rating Decline with respect to the notes. “Rating Decline” means the occurrence of the following on, or within, 90 days after the earlier of... if the notes of such series are rated below an Investment Grade Rating by at least one of the Rating Agencies on the Rating Date, the rating of the notes of such series by at least one of the other Rating Agencies shall be decreased by one or more gradations (including gradations within rating categories as well as between rating categories).

    The CoC is premised upon a downgrade by a rating agency as a means of protecting bondholders from an adverse ownership change. Depending on the potential buyer, this doesn't necessarily have to occur.

    It is also worth considering that the AUS operations do not have to be filed as a result of a filing in the US. There is no bright-line or specification as to how much of a debtor's operations a business represents in order to force a filing. The business would have to be shown to be insolvent and a creditor with a security intertest would have to try to force the company into administration.

    A 363 sale could attempt to sell the equity ownership of the Australian operations in order to effect its monetization, but look how that worked out for GM - one of the largest 363 debacles in the history of our country.
    Nov 19, 2015. 04:40 PM | 1 Like Like |Link to Comment
  • Time To Consider Joy Global [View article]
    JOY bonds trade on top of single B credits for a company that is, at worst, a BB. That said, mining is a falling knife.
    Nov 10, 2015. 11:40 AM | Likes Like |Link to Comment
  • Realty Income: A 'No-Headache' Commercial REIT Yielding 4.5% [View article]
    Equity research analysts at UBS’s equities research division decreased Realty Income’s stock from Neutral to Sell on 29 October. The analysts at UBS have a TP of $46.00 on O or -7.56% more downside.
    Oct 30, 2015. 10:51 PM | Likes Like |Link to Comment
  • Peabody Energy: It Feels Like March 2009 [View article]
    6% '18 and 10% '22 both rolled over and puked out 6 pts. when 2nd lien gets beat as much as unsecured, it is an ugly message
    Oct 30, 2015. 04:20 PM | 1 Like Like |Link to Comment
  • Peabody Energy: It Feels Like March 2009 [View article]
    BTU 6 '18 trace at $18, with what little volume there is trading at $19. Down less than a buck. The 2nd lien 10s are down nearly $3 to $30.
    Oct 30, 2015. 02:30 PM | Likes Like |Link to Comment
  • Annaly Capital Management And The 3 Series Of Preferred Shares [View article]
    Based on current prices, the Series D is the better position. Why? Because current yield matters very little when it comes to preferred shares. Due to possible differences in pay dates, and the fact that preferreds trade "dirty" or with accrued dividend in the share price, an investor should strip out the accrued and look at what is known in the business as the "stripped yield". When viewed using the proper methodology, one finds that the NLYPrC has a 7.80% stripped yield while the NLYPrD has a 7.79% stripped yield. NLYPrC has a 1bp advantage when it comes to stripped yield, but NLYPrD has a 55bps advantage on a yield-to-call basis. One basis point is easily worth the extended call protection (4 months) and yield to call. Also, NLYPrD trades roughly 10k more shares a day and there is value to liquidity. Preferreds are not simply yield comparisons.
    Oct 26, 2015. 05:17 PM | 7 Likes Like |Link to Comment
  • Mortgage REITs: Meat And Potatoes Or Deep Fried Bomb? [View article]
    I see three and five year returns listed above. 10yrs??
    AGNC IPO 2008
    TWO IPO 2010
    WMC IPO 2012
    HTS IPO 2008
    CIM IPO 2007
    IVR IPO 2009
    I guess you mean how everyone did vs NLY. So compare Realty income to Annaly over 10yrs (annual equiv) O: 14.68%, NLY: 10.64%. Simon Property SPG: 15.5% vs 10.64% for NLY. NLY does outperform many REITs, this is true (and also why I have a position in the Co), but if you are looking for 10yr returns from mREITs, good luck.
    Oct 23, 2015. 02:25 PM | 4 Likes Like |Link to Comment
  • EPR Properties' 6.6% Yield Is Worth A Look [View article]
    Both have shown themselves to be pretty resilient Smurf. Empire resorts should consume less capital than earlier expected, there are catch-ups in place with other properties that will fall to the bottom line, lease/debt distribution is moderate, leverage is low (approx 5.1x), tenant concentrations are dropping and education is proving to be attractive (did I mention I was long?). Another way to play it is through their Series F preferred with a stripped yield of 6.65%. The EPR series C convert pref yields 6.3% (shares trade about 3pts north of parity).
    Oct 14, 2015. 01:42 PM | 3 Likes Like |Link to Comment
  • What Should You Do With EMC Debt? [View article]
    We will either see more debt coming out of the EMC entity (bad) or structurally senior debt coming out of Dell (bad). EMC debt trading at +400/cv is pricing in the move from A>BB. Might be interesting if IG accounts push it further down when they bail.
    Oct 14, 2015. 01:27 PM | Likes Like |Link to Comment
  • Generation Y: Buying Worthless Degrees Instead Of Houses [View article]
    A good post on the value of a college degree is here (yes, I realize it is a year old, but...):
    Importantly, the transition to online education is many years away. As someone who has hired many people in the institutional investing space over the last two decades, I can say that an online undergraduate degree (can't think advanced degrees will be offered this way - despite the success of the CFA program - proud charter holder here) will, no time soon, be the equivalent of a standard university degree. Whether the discrepancy is merited or not is irrelevant, it is what it is.
    That said, according to the FRB, the outstanding student loan balance now stands at about $870 billion, surpassing the total credit card balance ($693 billion) and the total auto loan balance ($730 billion). This will, at some point, be an issue.

    Some great points made, certainly thought provoking.
    Oct 7, 2015. 01:27 PM | 2 Likes Like |Link to Comment
  • Investors Should Avoid This New Fund-Of-Funds ETF [View article]
    FOF - Fund of Funds or Fees on Fees?
    Oct 7, 2015. 11:05 AM | Likes Like |Link to Comment
  • Hedge Your Emerging Market Exposure With This Low-Volatility ETF [View article]
    Great article, idea and thesis. EM is (currently) on fire, but significant headwinds are in place, so the ability to dampen downside (when it comes, and with the EM it always does) is appealing. $EEMV has outperformed $EEM and $SCHE over virtually all timeframes. Thx. RA
    Oct 7, 2015. 10:00 AM | Likes Like |Link to Comment
  • CBL & Associates refinances two properties at lower rates [View news story]
    They tapped the secured debt market (non-recourse mortgages) because they couldn't get a $300MM unsecured deal done this week. They announced it and pulled it. Deal was being tossed around at +300/5yr.
    Oct 2, 2015. 03:11 PM | 1 Like Like |Link to Comment
  • Joy Global: Opportunity Favors The Bold - And Rational [View article]
    JOY has the ability to engage in liability management, despite the current environment and sentiment towards its end markets, the company generates free cash flow and has options.
    Oct 1, 2015. 02:03 PM | Likes Like |Link to Comment
  • Apollo Buys Stake In Schorsch's RCAP [View instapost]
    GNL return since post: 11.70%, Realty Income (O) -0.58%, $VNQ -3.14%.
    Oct 1, 2015. 01:11 PM | Likes Like |Link to Comment