Harvest 12.5% Yields In Alliance One International's 5-Year Bonds Maturing July 2021

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Randy Durig
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Summary

  • Earnings per share for FY 2016 were $7.38 compared with a loss of $3.16 per share a year earlier.
  • Sales for the company's Q4 for its fiscal-year 2016 (ended 3/31/2016) were $732.3 million, making it the second best quarter in the company's history.
  • Interest coverage for Q4 was an astounding 4.6x.

Our bond review this week profiles a company that is one of only two global publicly-held leaf tobacco merchants. Alliance One International (AOI) purchases, processes, packs, stores and ships tobacco to manufacturers of cigarettes and other consumer tobacco products throughout the world. Tobacco usage is still robust and growing in many parts of the world, even as tobacco usage may be declining in the United States. Some of this may be evident in Alliance One's most recent reported results.

  • Sales for the company's Q4 for its fiscal-year (FY) 2016 (ended 3/31/2016) were $732.3 million, making it the second best quarter in its history.
  • Interest coverage for Q4 was an astounding 4.6x.
  • Earnings per share for FY 2016 were $7.38 compared with a loss of $3.16 per share a year earlier.

Alliance has implemented cost savings and efficiency programs along with a commitment to use excess free cash flow to pay down long-term debt. Its 9.875% couponed bonds, maturing in July 2021, are currently discounted to around 90, giving a yield to maturity that's over 12.5%. Diversification is a sound method to reduce overall risk within an investor's portfolio, and these medium-term bonds provide income investors with great diversification into an agricultural company that has a long operating history in tobacco, and customer relationships dating back to the early 1900s. Alliance One is the quiet company supplying multinational giants such as Philip Morris (PM) and China Tobacco (CNTC). In short, these high-coupon 59-month bonds offer both superior cash flow and higher yields, and meet the criteria for addition to our FX1 and FX2 global high-yield income portfolios.

Outstanding Q4 and FY 2016 Results

Alliance One recently posted its results for its 2016 fiscal year (ended March 31, 2016) and for Q4 2016. Both Q4 and annual results are impressive. Several metrics for the company's Q4

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2.58K Followers
Durig Fixed Income provides market leading products and services: Please review our performances:  Durig's Fixed Income 2 (FX2)  &  Durig's Distressed Debt 1 Hedge Fund (DD1)  We  provide a Free Newsletter updating the fundamental research on several high yielding institutional bonds at Bond-Yields.com, combined with our low cost assistance, often allows our clients to broadly diversify their fixed income portfolio while often greatly enhancing their yields plus attaining superior overall returns. This service often allows our clients to achieve a much higher income combined with far greater diversification. -  call us at 971-327-8847

Disclosure: I/we 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.

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