The amount that the acquisition is accretive to EPS is figured after the interest expense is paid. Paying off that debt............well no reason to worry about that, at least at this time...(:^)
I didn't say that BDC loans would be going down. Their loans are below (credit wise) junk bond quality. As long as they can find takers for their funds at the rates they charge, there will be that niche for BDCs. Just remember what happened to BDCs in 2007 - 2009. It could happen again someday. You don't get 10 - 15% yields without a high degree of risk.
I have a small holding in STKL. They already raised (through a stock sale) $100 million to complete an acquisition. Now the junk bond market, which is almost at a standstill already for new issuance, has shown poor interest in their $330 million bond offering even at a 10% rate. Moody's chimed in that their covenant coverage was poor.
Could this push companies like STKL to try the BDC market for money at an even higher interest rate? Or will their deal likely just collapse even though they already completed the dilution portion of their "plan." Have to wonder how BDC loans are going down if the junk bond market is almost "frozen."
Quote from September 30 press release regarding the completion of the stock offering.....................
"If the Sunrise acquisition is not completed, the funds raised (about $100 million) will be used for general corporate purposes."
*****Looks like they knew that was a possibility.
Weak market for junk bonds even at 10%. In a separate press release Moody's says STKL's covenant coverage rates 4.26 on a scale of 1 - 5, with 5 being the worst possible. Not good.
Maybe we'll be stuck with a pile of cash from the stock offering and be unable to complete the acquisition. That might not be so bad anyway.
Look at Yahoo EPS estimates. Next 2 quarters are below year ago numbers. EPS this year 2.17 and 2.42 next year. Have to get more of this year's badness out of the way to pave the way for next year's return to positive numbers. Still watching.
Annual deficits will be about $200 billion higher for each 1% rates rise over the long term based on a soon to be $20 trillion of debt.
Will the politicians be around to apologize to our children and grandchildren?
Yeah, that Dollar menu is now the "Value" menu for most items. Wait until the change completely to 'cage free' eggs. MCD uses something like 21 billion eggs per year. Cage free producers can't handle that, at least right now.
Have now risen about 750 DOW points since Friday morning lows or approx 4.6%. Not sure how foolish investors really are. How can all the World's problems disappear over the weekend?
Maybe we will see 17,000. Even an 747 type airliner will continue forward for awhile if the engines are shut down in mid flight........before it starts falling.
Seems like the sucker game is on. Who is willing to buy at the highest price? Last Friday morning it was an extreme negative that the FED wouldn't have to raise rates because of poor economic conditions. Now it has become a positive somehow.
Have made trades today. Five sales and one buy.........a purchase of SPXS that shorts the S&P 500 X 3...
Kel.............a real skeptic
How could the Obama DOJ single out business executives for prosecution? They've almost totally ignored the blatant violations of numerous members of their very own Administration.
Phil and Ock........You are both of course correct about the lawyers. All these issues need addressing in spite of that. Many on this board were commenting on those very "unusual" activities as they were occurring.
With all that has happened at FSC / FSFR/ FSAM the last few years, it's not hard to see why so many BDCs are trading at huge discounts to NAV. Perhaps PSEC can be added to that group as well.
Might be OK as long as some situation doesn't arise to give investors cause to worry about credit quality. Always remember that BDC portfolio quality is lower than junk bonds.
Kel.......................holding only a little FSC in the BDC arena
KERX reminds me of AVNR. Same action now as sliding not long after approval as revenues were slow to develop in some opinions. I remember AVNR going down to something like $1.77 and went up almost 10 X from that point.
I did really well with STKL several years ago when sales were growing rapidly towards the $1 billion level.
Might be some similarity in holdings. Go to CEF Connect and enter the KYN symbol. When the page comes up, click on "ALL" on the left. Much info there including that KYN is almost 40% leveraged. Also trades at a 10% + discount to its Net asset value. Good website for any CEFs (closed end funds). Been using it for years.
Probably cost next to nothing to organize FSAM as an operating company. What do you need, perhaps an office and a revenue source. Already had the revenue source in FSC and FSFR. FSAm may have been capitalized (in non-public form) at almost $00, then sold to the public at a then bloated price.