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No. of Recommendations: 4
Stas,

I'll make this quick, because no one should buy --or not buy-- merely on the basis off someone else's opinion. I think FGPRQ's 6.5's of '21 suck.

Current ask is 99.1 (min 5) for a YTM of roughly 10%. But when you pull T&S, you'll see it's amateur hour in terms of trade sizes. That's worrisome. Next, pull the Moody's report and think about what they're saying. (Scary stuff.) Next, pull their balance sheet and look at trends and "the bottom line", which is negative and getting worse. Lastly, think about the overall economic environment in which we find ourselves and in which the company has to turn itself around. (Yellen's printing won't keep the Ponzi scheme going.)

My bet --which doesn't have to be yours-- is the possible rewards of buying their debt don't compensate for the risks that have to be taken. (Again, IMHO, 'natch.) But if you do want to make a bet, trade the common, because the payoffs are likely to be the same, and the entry requirements are a whole lot less.

In other words, taking a position in their 6.5's means putting around $5k at risk to try to grab roughly one-quarter of the coupon, or a gain of just 1-5/%. That sucks. Whereas the common, now at $0.55, was trading at $0.30 about a week ago.

Arindam
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