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February 1st, 2007 at 12:08 am
Eurobonds we hold…please advise.
February 1st, 2007 at 12:13 am
On the Eurobonds, I looked more closely and checked with the clearing agent
for my information–the floating-rate (FRN) yielding 4.65 and the perpetual
yielding 3.75. These bonds are not registered with the SEC. One very
important question, then, is “are the bonds held in physical form, if not
where are they held? Is the broker, you mentioned, the ‘holder’ of the
bonds? Depending how they are held, there may not be a need for an intermediary.
At this point, I recommend to see if the issues have attached warrants that can be
exercised. If such is the case, they could be converted into other assets,
i.e. maybe a Credit Line. I know that in the last few years the market for
these instruments has weakened and lost liquidity. There have been hardly
any new issues in the FRN market.
I looked at other similar current issues and see that they are performing
at higher yields, as I mentioned yesterday. For example, a current issue
of a eurobond by HBC and guaranteed by CCHBC, which is priced at 99.971
with a coupon of three month Euribor +20 basis points, is performing, on a
year to date basis, anywhere from 5.30% for Sweden down to 3.68% for the
U.K. All these returns are in local currency terms.