Q: Hi- PBH has just issued a debenture paying 5.5%- would this be a decent fixed income investment for a medium risk ? How will the stock impact this?
5i Research Answer:
Yes, we would be comfortable with these for fixed-income investors. It is a relatively small company but we would have little in the way of credit concerns here. Note the conversion price is well above the current market price, so we would treat these as straight, non-convertible debt for the time-being. Generally, converts are not great for stock prices, as investors sell and or arbitrage the new issue. But PBH shares absorbed the news fairly well.