A couple of interesting developments with the River Rock bonds that myself and persistentone have. As will be recalled, the bonds that should've matured late 2011 were, instead, replaced by an equal number of bonds at a lower interest rate because of problems that the River Rock Casino had in refinancing their debt. Later, things got worse as persistentone noted when they stopped complying with the SEC and are, thus, no longer rated by S&P, Moody's, Fitch, etc.I've continued to hold the bonds though the value in now less than 70% of par. My feeling has been that the value of the bonds will ultimately bounce back after River Rock demonstrates it still intends to make its interest payments on time. The first of these payments came due on 01 May and they did indeed make an interest payment, but it was less than what was owed. The bond is supposed to pay 9% interest via semi-annual payments which - I assume - would mean two 4.5% payments. Instead, the payment was more like 3.25%.One thing that was mentioned with the newly-issued bonds was that some of them might be redeemed early. In a previous post, persistentone commented:I'm very interested to see how they actually implement this requirement to buy back debt with excess EBITDA. On May 2, I received a message via Etrade that my position was subject to a "partial call lottery." This morning, I found that one of my River Rock bonds was called at par, so apparently my number came up. That, at least, was a positive development.
Per email to you, I believe there was interest paid on a partial period held, somewhere around 4.5 months.I'm much more comfortable with the bond now that I see how they are implementing promises made. It is ultra-junk, but risk and reward are at the right place for me. Or to paraphrase the Great Jabba in some episode of Star Wars "You are my kind of scum" :)
It is ultra-junk, but risk and reward are at the right place for me. Or to paraphrase the Great Jabba in some episode of Star Wars "You are my kind of scum" :) I was thinking that myself and pondering acquiring a few more shares, particularly with the price being so heavily discounted below par. But as I mentioned in my email, current minimum is 25 for River Rock bonds. I'll keep my eyes peeled in case that changes.
That 25 lot you were mentioning to me disappeared about 20 minutes later. The spreads on this bond are ultra-wide. It's interesting because I am able to get my bid to reflect on the order book, but if I go to sell my bonds the offer does NOT appear on the offer side of the order book.I think this may be because of that FINRA rule that requires a broker to have two other bids or offers in order to be able to post to an exchange. Since there was only one offer showing, they don't allow me to post a better offer.FINRA: ensuring its own employees juicy retirement employment at major investment banks by preventing competition in the bond market, and going strong. :)