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Author: howardgt One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35392  
Subject: Re: NII Capital (NIHD) 2016 Bonds 10% Date: 11/8/2013 4:48 AM
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< 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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