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Oaktree Takes It One Step Further.


I still don't know what's up here.

Not long ago OAK sold a $180 million in 6.65% preferred units.

Today OAK announced a $235 million additional preferred this one yielding 6.55% with a possible additional 1.4 million units. for over-allotments.

Is this a case of the company selling these bond like instruments to the public because they can?

Why does OAK need more than $400 million of additional cash?  All this liquidity must be for some specific purpose.

My previous blog article discusses the preferred A units.

On May 10th Oaktree Capital Made An Interesting Move. - KMR holder

This new announcement today describes the preferred B units.

Oaktree - Press Release

Oaktree does not need this cash for anything other than a purchase.  I doubt that they are just going to keep this money in their piggy bank for long.  Why would they pay more than 6.5% a year, just to sit on it.

I guess the fact that the preferred is trading at a premium since issuance proved to OAK that they could reduce the yield on the new issuance.  Will there be a preferred C coming along at a lower coupon?  Or has Oaktree enough cash for their purpose.

Disclosure: I am/we are long OAK.