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No. of Recommendations: 3
I have been watching a particular issue and drooling for some time, specifically the NNA 8.625%of '17 first mortgage bonds. I own a bunch of the equity, understand the issuer, market and ultimate parent well. I watched the bonds drift down to the low 80s and trade a couple weeks there. Low 80s is where I start getting interested (~12% YTM), especially since the mortgaged fleet is worth high 70s (bond coverage) and with the charters that are in place the bonds are covered at something like 200% at current prices. Yet every time I tried getting an ask at Schwab I got 89 or 90 asks. For whatever reason, I fnally saw an ask of 82.50 for up to 25 bonds yesterday and I umped on a chunk.

The most annoying thing is that while I was being offered these bonds at 89-90, I saw a number of institutional buys in the low 80s.

The deck is really stacked against the retail bond buyer in the junk market. I am convinced that the 25 bonds ffered at 82.50 were probably some other poor retail investor getting skinned as they tried to sell.
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