It’s All About Yield Or So We Think

At our esteemed President’s suggestion, we compiled data on a number of traded securities including publicly traded stocks in New York, high yield bond from Jefferies and Norwegian high yield and convertible bonds from NRP Securities ASA.  Below we have provided full descriptions of the bonds as well as more complete information on the stocks for greater insight. We then consolidated the data focusing simply on yield and sorted it from highest to lowest.

Matt’s frivolous suggestion was that we could create a holiday shopping list for you from this data. For this Grinch, all these numbers should mean something and so we provide you with some ideas/comments in no specific order:
Continue Reading

Songa’s Misguided Misadventure

In a presentation on Monday, Songa Offshore sought to explain its unexpected private placement of shares the previous week, at a discount of approximately 34% to the prior day’s close. The share placement alleviated a short-term liquidity shortfall as well as a breach of covenants.

The main culprit was its historic financial strategy. Over the last few years, Songa intentionally kept cash at tight levels of around $30 to $70 million, which level was increased as rigs were added. In addition, the company entered into TRS agreements during the 12-month period until January 2008.  Both worked as planned until worlds collided. In a matter of five weeks, the company’s TRSs went from $16.7 million in the money to $26.8 million out of the money a swing of $43.5 million. In addition, during the week of September 15th, Songa expected to rollover $50 million in commercial paper and was able only to roll only $22 million leaving a $28 million shortfall.

Continue Reading