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URL:  http://boards.fool.com/lt-wondering-if-anyone-else-is-holding-these-30963524.aspx

Subject:  Re: NII Capital (NIHD) 2016 Bonds 10% Date:  11/8/2013  4:48 AM
Author:  howardgt Number:  35094 of 35400

< Wondering if anyone else is holding these >

ytm,

I hold the 8.875’s of 19 and 7.625’s of 21, but I really can’t add anything to your comments about the company and it’s chances of surviving.

All the 3 NII issues seemed to be under heavy dumping today… as if someone expects another shoe to drop.

I prefer the 2019 and 2021 issues over the 2016 because mid/hi 50’s is much closer to an estimated 20% recovery (Moody’s LGD5 rating) than mid 70’s the 2016 are selling at. In addition, I don’t mind extending my duration when I get 20% YTM. But 20% YTM indicates a high likelihood of default, so I must factor this in.

According to my spreadsheet I show the following risk/reward ratios:

Maturity coupon MktPrc YTM Face+Int Gain at Mtrty Loss if BK Gain to Loss Ratio
08/15/16 10.00 73 23.8 127.73 55 53 1:1
12/15/19 8.875 58 21.6 154.20 96 38 2.5:1
04/01/21 7.625 56 18.9 156.45 100 36 2.8:1

I bought my original position in the mid 70’s. After the recent earnings, I added the 2019 in the low 60’s. Today (yesterday) I added 2021 in the mid 50’s. I now have my basic 2% (of junk) position, so I won’t be buying anymore until I see some positive changes developing.

Howard
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