No. of Recommendations: 2

You wrote, I hold a bond of a company that filed Ch. 11 last December. It is Edison Mission Energy. There is an active market for this bond, at about 50 % of what I paid for it. How does one determine the likelihood that this bond will eventually be redeemed for the price paid? I am wondering whether I should sell it instead of holding it.

I have a couple EME bonds as well. I think I paid just over 78 for mine back in 2010 and received a few coupons. I think I read an analyst report right after the filing that they were expecting a workout of about a 50 cents on the dollar. Right now my bonds look like they're trading around 56.

So now it's a judgment call. If you're optimistic on the work-out, you might hang on. But it also looks like it might be a pretty good time to get out.

I believe that when the BK was announced, the bonds were trading at or below 50. If the work-out is realistically more than a year away, 56 might be a pretty good price - if I can actually get it on just a couple of bonds. I've just been sitting on them and not really paying attention since the BK until you said something. Looks like I might ought to consider selling them now. But don't take that as advice. I really don't have enough experience in this area to tell what a workout might be worth.

- Joel
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.