We just glanced at the current trading price of the new Sotherly Hotels 7.25% baby bonds and we see that 700 shares just traded at $26.60. This issue has a early call date in 1 year–this means that if it were to be called in a year a buyer at the current price would realize 15 cents for holding 1 year. This is a yield to worst of less than 1%.
While we wished we could have gotten more than the 200 shares we secured at $25.55 we aren’t so crazy that we would pay this kind of price for shares now.
Obviously someone believes that with rising interest rates that the bonds will not be called early and they may well be right–but even so do you want to accept a yield to call in 2021 of 4.9%?