NOW YIELD 22-24%. iF they thought there was any value here they would be buying these large positions hand over fist. Others in this industry have much newer rigs but a revenue cliff looms as many of these rigs will NOT have a contract later this year as they roll off current contracts and are not renewed. Those that are renewed are at nearly half recent rates.
Financial restructuring is in the cards for many of these issuers. Rigs may be valued as low as 10 cents on the dollar. PACD has Sr Secured notes maturing in 2020 that trade at 19 cents. The company has about 5.4 billion in new ships (avg age about 3 years) and secured debt of about 2.9 billion. If you value the whole 2.9 at 19 cents you get a value of $550mm or 10% of book. If you think this is too low, then buy the 5.375% bonds at 19. Earn 27% annual cash return and 500% price appreciation if they don't restructure.
How old are RIGs rigs? Where should they be priced?