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J. C. Penney Company, Inc. Message Board

  • supor450 supor450 May 30, 2014 1:28 PM Flag

    JCP bonds continue marching up

    The Aug 2016 series are currently offered at a low of $101.065 and as high as $102.195.

    Stunning advance over the past few months.

    Likewise, the 2021 series are trading above par at $101+.

    The bond market is clearly not concerned about JCP's liquidity over the next ~ decade.

    Even the century 2097 bonds are trading at $81+, not too shabby for a company that some folks believe are on the verge of failing.

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    • Supor450,

      Thanks so much for these updates, as I tend to forget to check the bond prices regularly. This is excellent news, since, as you pointed out below, the debt markets tend to be vastly more knowledgeable than the equity markets (a kind of elites vs plebs separation in some ways... not pretty but true).

      This bodes very well for the strength of JCP's position and helps provide much needed financial context for the equity.

      Very Best

    • how are bonds affected if JCP restructures BK or stock trades under $1 for a year
      or so period before entering into a BK?

      • 2 Replies to timloooo
      • You (and others) miss the points:

        1. The bond investors/lenders are vastly more sophisticated than equity investors--particularly retail types. The bond market dwarfs the stock market, it's populated with very sophisticated investors, mostly institutional. Lenders have vast sums of capital at stake, and so they conduct superior DD.

        When bond investors start bidding up prices, it's a very reliable indicator that the risk level is declining. At par ($100), lenders are clearly confident that they'll get all their capital back.

        2. Debt is senior to equity. When debt is trading near/at/above par, it's a sign that there's value left over for equity.

        JCP is a distressed/turnaround situation, it's fluid. Most bashers here have static mindsets and can't see postive changes that are happening.

      • When JCP goes into chapter 11, there won't be a whole lot left for the bondholders. The company has massive debt and most of its assets have already been pledged against loans. So you'll collect your interest unless and until JCP files for reorganization. After that it's pennies on the dollar for your bonds.

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