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Rubicon Associates
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Rubicon Associates is headed by a Chartered Financial Analyst with over 20 years of experience in the investment management industry focused on the analysis, investment and management of fixed income and preferred stock portfolios. Over the years, he has analyzed and invested in both public and... More
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  • Debt Financed Dividends - Forward to the Past? 0 comments
    Apr 1, 2010 4:17 PM
    Interesting information from Barclays (via Bloomberg):
    Four high-yield, high-risk borrowers issued bonds this week to pay dividends, tripling the total for 2010, Barclays Capital wrote today in a report.
    The offerings are “an additional sign of the strength of demand for new high-yield issues,” Barclays analysts led by Bradley Rogoff in New York wrote in the report.
    Maxim Crane Works Holdings Inc., Pharmanet Development Group Inc., Freedom Group Inc. and Provident Funding Associates sold bonds this week to fund dividends, joining earlier issuers Vanguard Health Systems Inc. and Ryerson Holding Corp., Rogoff said.
     
    Couple thoughts on this:

    1.  Haven't we been here before?  How did it turn out?
    2.  Combine this with the increasing multiples being paid by private equity (which market is this going to be funded in, I wonder) and we are lead to one conclusion:

    memories are getting shorter by the day.

    Disclosure: own various high yield issues - bond and preferred stock
    Themes: high yield
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