Correction: At E*Trade, min-purchases in the book on the 8.25's was just amended to include 5's and 10's. Thus, by 'paying up', a smaller lot could be bought. But the question still to be answered is whether their debt should be bought at all. This isn't classic, Ben Graham-style "value-investing". It's new-issue, junk-bond investing, which is an entirely different game. Take at look at their yield-curve. It is flat, flat, flat, offering a max YTM of about 8.5%. On an after-taxes, after-inflation basis, the situation is even worse. Cpn Due AdjYTM8.500 05/15/18 1.08%9.000 04/15/19 1.30% 7.875 08/15/19 -0.61%9.875 08/15/19 1.47% <<==tactically, a better buy than the 8.25's of '218.250 02/15/21 1.37% Do you really want to put capital at risk that offers, at best, a real gain of 1.47%? A couple of quick scalps would offer more than that, and the rest of the year one could sit in cash. Always, always, always, in the investing/trading game, this question has to be answered: How much reward is being offered for how much risk? I'd be willing to bet that Reynolds will survive. But I'm not wiling to lend them money at current prices.
Cpn Due AdjYTM8.500 05/15/18 1.08%9.000 04/15/19 1.30% 7.875 08/15/19 -0.61%9.875 08/15/19 1.47% <<==tactically, a better buy than the 8.25's of '218.250 02/15/21 1.37%
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