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URL:  http://boards.fool.com/same-sinking-boat-myself-folgore-i-wouldnt-30668017.aspx

Subject:  Re: bond of company in CH. 11 Date:  5/4/2013  9:26 PM
Author:  howardgt Number:  34883 of 35345

Same sinking boat myself!

folgore,

I wouldn’t give up so easily... I also hold Edison Mission bonds which I accumulated in early 2010 at an average cost in the mid 70’s (high 50’s after adjusting for interest) Current losses are not too bad for a defaulted bond... I wish all my defaults did so well :)

I think Edison Mission bonds are now a natural gas play . The bonds trade on the prospects of a natural gas (and coal) price recovery.

Wholesale electricity prices slumped when natural gas prices collapsed (to under $2). This and the high-cost of government mandated environmental upgrades to coal-fired plants caused many power producers to exit the unregulated market and retire or dispose unprofitable coal-fired generators.

In Dec 2012, EIX agreed to turn-over 100% of Edison Mission Energy to its unsecured creditors. The official reorg and separation is expected to take effect in Dec 2014 (so that EIX can utilize tax losses, I think I read somewhere). So a good portion of Edison Mission bond value now reflect the prospects of the wholesale electricity market at the end of 2014.

But meanwhile NG prices have rallied and other power generation asset prices are also rallying on hopes that wholesale electricity prices have finally hit a cyclical low and are now on an uptrend. See Ameren(AEE) sale of Genco’s coal-fired plants to Dynegy(DYN) and the subsequent rally of Amerenenergy bonds

Amerenenergy (02360XAL1) - 7.00% 04/15/2018
(http://cxa.gtm.idmanagedsolutions.com/finra/bondcenter/BondD...).

Edison Mission Energy bond prices have also rallied so far this year.
Edison Mission Energy (281023AR2) – 7.75% 06/15/2016
(http://cxa.gtm.idmanagedsolutions.com/finra/bondcenter/BondD...).


So, I will hold my EME bonds for now and monitor Natural Gas, Coal, and Electricity prices. I’m prepared to bet on a recovery in the wholesale electricity market and I’m still hoping for a good profit on these bonds (north of 75).

JMHO for what it's worth (nothing),
Howard
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