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9.94% for FX1 Year-In-Review

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Year-In-Review: November 1, 2013 to October 31, 2014

Presented below is a summary of the 30 bond reviews and recommendations that we have given to our clients over the past twelve months, from the end of October, 2013 through the start of November, 2014.  Twenty three of these global corporate debt instruments were Yankee Bonds (foreign corporation debt denominated in US dollars), and seven were issued in other currencies, including, Canadian dollars, Australian dollars, Brazilian reals, and British Pound Sterling.

 

Each summary that follows lists the issuer, coupon rate, maturity, credit rating, the yields at the time of acquisition, the portfolio (FX1, FX2, or FX3) each was added to, as well as a brief update of the issuer.  Many of the companies hold dominant positions within their respective countries.  It is not uncommon, however, to find credit ratings that are constrained by a national sovereign credit rating.

 

·         23 US dollar debt additions, with average indications of 9.84%*, made to FX1.

·         30 mixed currency debt additions, averaging 9.63%*, were made to FX2.

·          7 foreign currency debt additions, averaging 8.96%*, were made to FX3.

 

The bonds in the portfolios have an average outstanding maturity of just over 41 months (3 years, 5 months) and the yields shown below reflect when these securities were added to our FX1, FX2, and FX3 Fixed Income Portfolios.  The overall average yield indications at the time of recommendation for addition to the portfolios is about 9.63%*.


 

10% Yield, Cimento Tupi Yankee Bond

Issuer:  Cimento Tupi

Coupon: 9.75%

Maturity:  5/11/2018

Ratings: NA

Pays: Semi-annually

Price:  99.0 (as of 10/21/2014)

Yield to Maturity: ~10.0%

Portfolios: FX1 and FX2

Cimento Tupi has made an impressive recovery the first half of 2014 from losses in the same period in 2013, recording healthy profits and a stellar 33% increase in revenues. More about Cimento Tupi.

8% Yield, Kuwait Energy Yankee Bond

Issuer:  Kuwait Energy

Coupon: 9.50%

Maturity:  8/04/2019

Ratings: B-

Pays: Semi-annually

Price:  105.50 (as of 10/21/2014)

Yield to Maturity: ~8.05%

Portfolios: FX1 and FX2

Kuwait Energy is poised to double its oil production over the next few years, and we are impressed with the company’s consistency in the midst of the political turmoil surrounding the Middle East.  More about Kuwait Energy.

12.4% Yield, Edcon Yankee Bond

Issuer:  Edcon Holdings (Proprietary) Limited

Coupon: 9.50%

Maturity:  3/01/2018 (callable at par 2016 and thereafter)

Ratings: B/B3

Pays: Semi-annually

Rank: Senior Secured

Price:  92.0 (as of 9/18/2014)

Yield to Maturity: ~12.42%

Portfolios: FX1 and FX2

Edcon’s total revenues continue to grow, and gross profit margins have exceeded 36% over the last 3 years. More about Edcon.

7.5% Yield, TransGlobe Energy Convertible Notes in Canadian dollar bonds

Issuer:  TransGlobe Energy

Coupon: 6.00%

Maturity: 3/31/2017

Ratings: NA

Pays: Semi-annually

Price: 96.5 (as of 9/12/2014)

Yield to Maturity: ~7.55%

Portfolios:  FX2 and FX3

For September 20, 2014, TransGlobe Energy Corporation posted more-than-expected cash flow per share of $0.58 ($44 million) compared to the Street forecast of $0.38 and consensus of $0.40. Cash flow was backed up by a $9.4 million payment due to the Caracal termination fee. Exclusive of the one-time earnings, cash flow per share was yet impressive at $0.46, or 15.1% above Street consensus. More about TransGlobe.

8.75% Yield, IAMGold Yankee Bonds

Issuer: IAMGOLD Corporation

Coupon: 6.75%

Maturity: 10/1/2020

Ratings: B1/BB-

Pays: Semi-annually

Price: 90.75 (as of 9/12/14)

Yield to Maturity: ~8.75%

Portfolios: FX1 and FX2

IAMGold recently sold its Niobec mine to a group of companies led by Magris Resources, Inc. for $530 M USD.  This brings their already strong cash balance of nearly $300 M USD to over $800M, giving the company excellent liquidity and increased opportunity for gold exploration and production. More about IAMGold.

9.6% Yield, Copeinca Yankee Bonds

Issuer: Copeinca S.A. (Corp Pesquera Inca SAC)

Coupon: 9.0%

Maturity: 2/10/2017

CUSIP: R15893AA9

Ratings: B2/B/B+

Pays: Semi-annually

Price: 98.75 (as of 9/8/14)

Yield to Maturity: ~9.6%

Portfolios: FX1 and FX2

Copeinca’s parent company, China Fishery has issued a consent solicitation to bondholders that would allow Copeinca to guarantee as much as $1.2B in debt at the parent company. Bondholders have not agreed and China Fishery may need to refinance this debt. The notes may be called after February 10, 2014 at 104.5 cents on the dollar. More about Copeinca.

7.3% Yield, Nitrogenmvek Yankee Bonds

Issuer: Nitrogénművek, Zrt.

Coupon: 7.875%

Maturity: 5/21/2020.

Ratings: BB-

Pays: Semi-annually

Price: 102.65 (as of 8/22/14)

Yield to Maturity: ~7.3%

Portfolios: FX1 and FX2

Nitrogenmvek maintains its commanding 70% market share in its home country of Hungary and is increasing its annual  fertilizer production by 65% to meet increasing demand.  More about Nitrogenmvek.

12.25% Yield, Transener Sinking Yankee Bond

Issuer: Compania de Transporte Energia (Transener)

Coupon: 8.875%

Maturity: sinks an additional ¼ on 12/15/14, another ¼ on 12/15/15, remainder on 12/15/2016. Average life 12/15/2015. Callable at par after 12/15/14.

Ratings: CCC-

Pays: Semi-anually

Price: 96.0 (as of 8/13/14)

Yield to Average Life: ~12.25%

Portfolios:  FX1 and FX2

For the second quarter 2014, Transener had a year-over-year increase of 77.2% in consolidated net sales. Consolidated net profit grew to AR$88.8M for Q2 2014, up from a AR$8.8M loss for the same period 2013.  More on Transener.

5.85% Yield, R & R Ice Cream Bond in British Pounds

7.8% Yield, R & R Ice Cream in Australian Dollars

Issuer: R&R Ice Cream, PLC

Coupon: 5.5%, in British Pound Sterling (GBP)

Maturity: 5/15/2020

Pays: Semi-annually

Rating: B2

Rank: Senior Unsecured

Price: 98.25 (as of 8/12/14)

Yield to Maturity: ~5.85%

Portfolio: FX2 and FX3

 

Issuer: R&R Ice Cream, PLC

Coupon: 8.5%, in Australian Dollars (AUD)

Maturity: 5/15/2020

Pays: Semi-annually

Rating: B2

Bank: Senior Unsecured

Price: 102 (as of 8/12/14)

Yield to Maturity: ~7.8%

Portfolios: FX2 and FX3

In order to meet increased demand, R&R’s premium ice cream brand, Kelly’s of Cornwall, had increased production by 130% and is now growing twice as fast as the British ice cream market. More on R&R Ice Cream.

9.5% Yield, Autopistas Del Sol Sinking Yankee Bond

Issuer: Autopistas Del Sol

Coupon: 6.5%, steps up to 7.0% Dec 2014 and 8.25% after Dec 2015.

Maturity: sinks ⅓ on 6/01/2018, ⅓ on 6/01/2019, remainder on 6/1/2020. Average life 4/18/2019.

Ratings: -/-

Pays: Semi-annually

Price: 93.625 (as of 7/23/14)

Yield to Maturity: ~9.5%

Portfolios: FX1 and FX2

Autopistas Del Sol’s stock price is up 116% in the past year.  It is currently trading at 5.40 ARS.  More on Autopistas Del Sol.

10% Yield, Mironivsky HilboProduct Yankee Bond

Issuer: Mironovsky Hilboproduct (MHP)

Coupon: 8.25%%

Maturity: 4/02/20

Pays: Semi-annually

Rating: CCC (Fitch)

Rank: Senior Unsecured

Price: 92.75 (as of 7/9/14)

Yield to Maturity: ~10%

Portfolios: FX1 and FX2

Domestic sales increased 23% year-over-year for the nine months ended September 30, 2014.  Export sales increased 20%year-over-year  for the nine months ended September 30, 2014.  More on Mironivsky HilboProduct.

9% Yield, China XD Plastics Yankee Bond

Issuer:  Favor Sea Limited/China XD Plastics

Coupon: 11.75%

Ratings: -/-

Maturity: 2/4/2019

Pays:  Semi-annually

Price:  110.375 (as of 6/30/14)

Yield to Maturity: ~9%

Portfolios:  FX1 and FX2

For the second quarter 2014, China XD Plastics had revenue growth of 30.7% year-over-year, and gross profit growth of 40.6% year-over-year.  More on China XD Plastics.

 

10.5% Yield, Petroleos de Venezuela Yankee Bond

Issuer: Petroleos de Venezuela S.A. (PDVSA)

Coupon: 8.5

Maturity: 11/2/2017, average life of this sinking bond is 10/17/2016

Pays:  Semi-annually

Rating: B-

Price: 95.75 (as of 6/30/14)

Yield to Maturity: ~10.5%

Portfolios:  FX1 and FX2

Venezuelan state oil company PDVSA plans to invest $20 billion to expand its domestic refining capacity by 20 percent, a company official stated in October. The plans also involve optimizing the operations of the Paraguana Refining Center (CRP) to boost its output.  More on Petroleos de Venezuela.

9.58% Yield, Rolta Yankee Bonds

Issuer: Rolta LLC

Coupon: 10.75%

Maturity:5/16/2018

Ratings: BB-

Pays: Semi-annually

Price: 103.7 (as of 6/30/14)

Yield to Maturity: ~9.58%

Portfolios: FX1 and FX2

For Q1, FY-2015, Rolta’s consolidated revenue registered year-over-year growth of 44%, and consolidated EBITDA registering year-over-year growth of 30.3%. More on Rolta.

9.0% Yield, Lake Shore Gold – Canadian Bonds

Issuer: Lake Shore Gold

Ticker: LSG

TSX: 0.77

Debenture (Bond):

Coupon: 6.25%

Maturity: 9/30/2017

Rating:  NA

Conversion Price:  1.40 (CAD)

Pays: Semi-annually

Price: 92.25 (CAD) (as of 6/17/14)

Yield to Maturity:  ~9.0%

Portfolios: FX2 and FX3

For the nine months ended 9/30/2014, LakeShore achieved record production of 142,500 ounces, a 72% increase from the first nine months of 2013. More on LakeShore.

12.25% Yield, Brasil Foods in Brazilian Real

Issuer: Brazil Foods

Coupon: 7.75%

Maturity: 5/22/2018

Pays: Semi-annually

Rating: Baa3 (Moody’s)

Rank: Senior Unsecured

Price: 86.25 (as of 6/6/2014)

Yield to Maturity: ~12.25%

Portfolios: FX2 and FX3

For Q2 2014, Brasil Foods had net income of BR $267.1M, 28.1% higher than in Q2 2013.  Also, it registered free cash flow of BR $954.0 M, 161.4% higher than in Q2 2013.  More on Brasil Foods.

8% Yield, Ceagro Agricola Yankee Bonds

 

Issuer:  Ceagro Agricola, Ltd.

Coupon: 10.75%

Ratings: B

Maturity: 5/16/2016

Pays:  Semi-annually

Price:  105 (as of 6/5/2014)

Yield to Maturity: ~8%

Portfolios: FX1 and FX2

Mitsubishi Corporation, who owns a 80% controlling interest in Ceagro Agricola, said in August that it has plans to double its grain exports from Brazil to 4 million tons in the next few years. More on Ceagro Agricola.

8.67% Yield, Eastcomtrans Yankee Bonds

Issuer: EastComTrans LLP

Coupon: 7.75%

Ratings: B3/-/B

Maturity: 4/22/18

Pays:  Semi-annually

Price: 97.0 (as of 5/27/14)

Yield to Maturity: ~8.67%

Portfolios: FX1 and FX2

 

For the six months ending 6/30/14, EastComTrans had a 25% increase in operating profit over the six month period ending 6/30/13.  More on EastComTrans.

7.5% Yield, CanWel Canadian Dollar Convertible Bonds

Issuer: CanWel Building Materials Group

Stock Ticker: CWX.TO

Price: 2.77 (4/4/14)

Bond Coupon: 5.85%

Ratings: NA

Maturity: 4/30/2017

Conversion price: 6.40 (anytime prior at bondholder’s option)

Pays: Semi-annually

Price:  ~95.5 (as of 5/9/14)

Yield to Maturity: ~7.5%

Portfolios: FX2 and FX3

For the quarter ended September 30, 2014, operating earnings were $10.9 million compared to $8.2 million in the same quarter of 2013, an increase of $2.7 million or 32.9%. More on CanWel.

10% Yield, Aeropuertos Argentina 2000 Yankee Bonds

Issuer: Aeropuertos Argentina 2000

Coupon: 10.75%

Maturity: 12/1/2020

Ratings: CAA1/CCC+

Pays: Quarterly

Price: ~101.5% (as of 5/1/14)

Yield to Maturity: ~10.2%

Portfolios: FX1 and FX2

For the quarter ended 6/30/14, profit for Aeropuertos Argentina 2000 increased by 16% as compared to the same time period for 2013, from ARS $126,389,000 to ARS $147,428,000.  More on Aeropuertos Argentina 2000.

10.6% yield, AmBev Brazillian Real Linked bonds

Issuer: AmBev/Anheuser-Busch Inbev SA/NV

Coupon: 9.5%

Maturity: 7/24/2017

Ratings: A2/A

Pays: Semi-annually

Price: 97 (as of 4/17/14)

Yield to Maturity: ~10.6%

Portfolios: FX2 and FX3

For the six months ending 6/30/14, Anheuser Busch InBev revenue grew by 6.8% over the same period for 2013.  EBITDA grew 10.1% for the six months ending 6/30/14 as compared to the same period for 2013.  More on AB InBev.

12% Yield, MNC Investama Yankee Bonds

Issuer:  Ottawa Holdings Pte. Ltd/PT Bhakti Investama Tbk

Coupon: 5.875%

Ratings: B2/BB-

Maturity: 5/16/2018

Pays:  Semi-annually

Price Target:  ~80.5 (as of 4/1/14)

Yield to Maturity: ~12%

Portfolios: FX1 and FX2

For the first half of 2014, MNC Investama had a 9% increase in total revenues over the same time period for 2013.  More on MNC Investama.

10.75% Yield, Rolta Yankee Bonds

Issuer: Rolta LLC

Coupon: 10.75%

Maturity:5/16/2018

Ratings: BB-

Pays: Semi-annually

Price: 100 (as of 2/19/14)

Yield to Maturity: ~10.75%

Portfolios: FX1 and FX2

For Q1, FY-2015, Rolta’s consolidated revenue registered year-over-year growth of 44%, and consolidated EBITDA registering year-over-year growth of 30.3%. More on Rolta.

8.25% Yield, HudBay Minerals Yankee bonds

Issuer: HudBay Minerals

Coupon: 9.5 %

Maturity: 10/1/2020

Pays:  Semi-annually

Rating: B3/B-

Price: 104.8 (as of 2/13/14)

Yield to Maturity: ~8.23%

Portfolios: FX1 and FX2

 

In the second quarter of 2014, HudBay Minerals reported operating cash flow before change in non-cash working capital had increased to $11.8 million from negative $10.7 million in the second quarter of 2013. More on HudBay Minerals.

9% Yields, Temple Hotels Canadian Dollar bonds

Debenture (Bond): TPH.DB.F

Coupon: 7.0%

Maturity: 03/31/2018

Conversion Price: $ 7.80

Rating: none

Pays: Semi-annually

Price: 93.5 (as of 1/16/14)

Yield to Maturity: ~9%

Porftolios: FX2 and FX3

For the six months ended 6/30/14, Temple had a 21% increase in revenue over the same time period for 2013.  Operating income also increased by 6% in the first half of 2014, as compared to 2013. More on Temple Hotels.

8.8% Yield Avangardco Holdings Yankee bonds

Issuer: AvangardCo

Coupon: 10.0%

Ratings: B- (Fitch)

Maturity: 10/29/2015

Price:  101.9 (as of 1/15/14)

Yield to Maturity: ~8.8%

Portfolios: FX1 and FX2

 

In the first nine months of 2014, export demand for Avangardco’s products remained robust. The company increased its exports which have partially offset the lower demand in the domestic market. In the first 9 months of 2014, export sales of shell eggs increased by 32% year-on-year. The company’s exports went mainly to the Middle East and North Africa, Central and West Africa, and the CIS countries. More on Avangardco.

9.66% Yield, Dana Gas Yankee Bonds

Issuer: Dana Gas

Coupon: 9.0

Maturity: 10/31/2017

Pays:  Quarterly

Rating: NA

Price: 97.875 (as of 12/11/13)

Yield to Maturity: ~9.66%

Portfolios:  FX1 and FX2

 

Dana Gas had a 70% jump in net profit to $46 million in 2Q 2014 as compared to $27 million in 2Q 2013 mainly due to higher production, increased sales of higher margin liquid petroleum gas in the Iraq Kurdistan region, and lower operating cost. More on Dana Gas.

8.45% Yield, Camposol Yankee Bonds

Issuer: Camposol S.A.

Coupon: 9.875%

Ratings: B

Maturity: 02/02/2017

Pays: Semi-Annual

Price:  104 (as of 11/12/13)

Yield to Maturity: ~8.45%

Portfolios: FX1 and FX2

For Q2 2014, Camposol had EBITDA of USD $16.3 million, 165.5 % higher than Q2 2013 due to higher sales volumes, mainly in avocadoes. Volume of products sold for Q2 2014 was up 68.3% from Q2 2013, mainly due to increased sales of fresh avocados.  More on Camposol.

14.38% Yield, Brigus Gold Convertible Yankee bond

Issuer: Brigus Gold

Ticker: BRD

NYSE: $0.74 11/4/2013

Debenture (Bond):

Coupon: 6.5%

Maturity: 3/31/2016

Conversion Price: $ 2.45 Canadian (now irrelevant)

Rating: none

Pays: Semi-annually

Price:  84.45 (as of 11/4/13)

Yield to Maturity: ~14.38

Portfolios: FX1 and FX2

 

Brigus Gold was acquired by Primero Mining in March of 2014. As of June 30, 2014, $48.1M of the $50M principal from the original bond offering is still outstanding, with Primero assuming the balance of these debentures. More on Brigus Gold.

10+% Yield, Transportadora de Gas Del Sur Yankee Bond

Issuer: Transportadora de Gas del Sur S.A

Coupon: 7.875%

Maturity: 5/14/2017 (laddered call, 25 month average redemption)

CUSIP: P9308RAX1

Ratings: B3/B-

Pays: Semi-annually

Price: 95.5 (as of 10/29/2013)

Yield to Call (5/14/14): ~18.8 % (call price is 100.984)

Yield to Call (5/14/15): ~11.1 % (at par)

Yield to Call (5/14/16): ~10% (at par)

Yield to Maturity: ~9.4 %

Portfolios: FX1 and FX2

For the first half of 2014 (period ending 6/30/2014), net revenues for Transportadora de Gas Del Sur increased by 69%, over the same period for 2013.  More on Transportadora de Gas Del Sur.

  We hope you enjoy our high yield income approach!

To learn more about these FX1, FX2 and FX3 portfolios please call our fixed income specialist at 971-327-8847.

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* Yield indications at the time of recommendations for addition to individual portfolios are not presented as year to date performance averages. Also, please note that all yield and price indications are shown from the time of our research, and our reports are never an offer to buy or sell any security.  We are not a broker/dealer, and reports are intended for distribution to our clients.  As a result of our institutional association, we may obtain better yield/price executions for our clients than is initially indicated in our reports.   We welcome inquiries from other advisors that may also be interested in our work and the possibilities of achieving higher yields for retail clients.

To know more about these bonds call our fixed income specialist at 971-327-8847

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Durig Capital : Always putting your interests first!


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Information on this website is provided for informational purposes only and is not offered as advice with respect to any particular security or related financial instrument. This information should not be used as a basis for making an investment decision and must not be treated as a substitute for seeking advice from a licensed professional. The suitability of a given investment for a particular investor depends on a number of factors, each of which should be considered carefully. Such factors include, but are not limited to, the risk associated with the investment, the nature of current market conditions, and the investor’s objectives, personal needs, and specific circumstances. This is neither a solicitation to buy nor an offer to sell to persons in Texas.

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