Q: Hello
I have a position here, they announced a bond issue at 9.5%. I’m not sure how this sets up growth and also 9.5 seems high?
Thankyou
I have a position here, they announced a bond issue at 9.5%. I’m not sure how this sets up growth and also 9.5 seems high?
Thankyou
5i Research Answer:
It is a very small company ($263M market cap) operating in foreign jurisdictions. The yield curve has shifted somewhat and we would not see the rate as that unusual here for a BB- rated company (S&P rating). EPS is expected to grow 30%+ next year. Debt interest is tax deductible, but PIF's return on capital last year was 5.82% so this does need to improve to make this bond issue the right move for the company.