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Atlanticus Holdings Finally Prices Baby Bonds

Sub prime lender Atlanticus Holdings (ATLC) has priced the previously announced baby bonds.

The issue prices at 9.25%. The issue will trade on the NASDAQ in a week or so under ticker ATLCZ.

This issue is callable at anytime–with payment of a bonus payment outlined in the prospectus.

The pricing term sheet is here.

37 thoughts on “Atlanticus Holdings Finally Prices Baby Bonds”

  1. ATLCZ is trading today 1/31. That was very fast compared to other recent issues, I guess they needed the money 🙂

  2. The yield of 9.25% makes sense given the YTM of ATLCL is about 9% and ATLCP is yielding about 8.5%.

  3. Discussion of Ole Blue Eyes and Sid Vicious aside ( yes a single sentence that included both…)

    I am left to wonder if we are hearing a bell ring. IMO we have seen some unusual activity with several issuers partcularly mREITS and now the subject of this thread come to market with 5 year ~9% notes.

    My questions are why and why now?

    It gives me pause that only after the rise in rates and potentially before a well telegraphed reduction in rates we are seeing these issues come to market.

    It is also interesting that today on another source there was an article about the fact that US Treasury funded $2T in new issuance with maturity less than 1 year. It would seem that Treasury expects long dated rates to drop materially.

    While I will certainly pass on mREITS trading below book and not earning their distribution, and while I will also pass on sub-prime lenders, I am wondering if the bell is ringing and the market is telling me to lock in high fixed rate yields while they are still here.

  4. 2 White – I never said the Sex Pistols were good.

    I did, however, live in Detroit when Eminem (and Kid Rock for that matter) was becoming popular. Eminem is actually from Warren but that is close enough to get most of the appropriate Detroit credit. Kid Rock, however, grew up in the country (way north at 36 mile in Romeo MI)…

    Anyway in reference to your Eminem comment I will only say Go Lions!

    In reference to Thread Police.. thankfully this is not a music discussion board.

  5. Way back when I was in high school I used to give a friend rides to area pool rooms to play pool for money. I had access to a vehicle and he didn’t. We grew up in rural eastern North Carolina and playing pool was a big deal. This guy was one of the best pool players around at an early age. I enjoyed watching him play. I asked him once how he could play nineball for a couple of dollars a game with men much older than himself and not seem pressured the least bit. He laughed and said when he walked into a pool room he told himself he had X dollars in his pocket that he could afford to lose. If he lost it (not very often at all!) he put up his pool stick and we either watched the action or left. Investing in something like this one you better follow the same rule my friend had. Only gamble with what you can afford to lose and get out of the game when you lose it.

  6. That is a higher then I expected. I thought it would come in lower then the other BB if bought today and one allowed it to mature. I was thinking <= 9% it would come out as or something. Shows what I know.

    Also isn't the bonus sort of backwards? Before 2026 they just pay 25. After you get the bonus…

    With that said I think I would rather have a maturity in 2026 then this. I think. Trying to think through if this would be worth a swap and my gut is saying no.. not really. A bird in the hand, versus two in the bush or something like that. But 9.25% @25. Geez. That Egan Jones "A" is chef's kiss 😉

    1. Yes it’s strange they had to offer such a high yield. Burned the holders of the existing preferred and 2026 Notes.
      I wonder what type of self-dealing was going on with the super high interest rate they were paying in the private preferreds they plan to redeem with this.
      Do you think an Egan Jones A at least equals a bbb-/Baa3 from a real agency?

      1. I think an Egan Jones rating of any type almost always means junk. So maybe a B if we are lucky. ATLC* baby bonds and preferred are not sleep well at night purchases. They are a higher risk play stretching for some extra yield. With that said I own quite a bit but each and every quarter I have to examine how they did. As long as they keep making money I will continue to hold. If I see a loss one day it will make me rethink my whole thesis.

        I have a lesser amount of the preferred compared to the existing BB. I like the fact it matures in 2026 and that gives me an exit strategy. The new BB, if I swapped, I am not sure how it will play out exactly.

        1. When I borrow money the bank asks to see my finances. I feel uncomfortable they offering such a high rate because the group of bookies floating this offer got a look at the finances before the next upcoming quarterly report due in March. I have enough stress without adding to it by holding these 2 BB with the suspense of waiting for that report. If I was even interested. I would hold off until then to buy.

          1. I think my PBI-B shares are safer than these and they yield a bit more at their current price of $16.85. Also they have a S&P BB rating, so a bit better junk I think. Rather sink a few more bucks in those than buy this one.

              1. Grid,
                Thanks, missed that change. That would be an Egan Jones AA 🙂 I think Hestia shook things up enough with a few new board members and an interim CEO that instead of plodding along year after year as usual they are going to finally make a buck later this year. They pay a 4.5% dividend on the common, so a little bit of a cushion there, we’ll see how she goes. This one and TPVG are in my wild card bucket.

                1. Bill, everybody deserves a little spice in their life! I have traded them before, but am not in them now. A poster named Tigerbond on SA mentioned this last week if it interests you any.
                  Also, their Q3 numbers drops their TTM EBIT interest coverage below 1.0, making PBI officially a zombie. Hopefully they’re able to reverse that trend, as that’s not a good sign.
                  Separately, their dividend is currently uncovered (after barely being covered in ’22, and being uncovered in both ’21 and ’20). It really should be axed in my opinion. They should not be paying an uncovered dividend with B-rated bonds trading in the $50s at >12% yields. It’s just making them riskier and more leveraged at this point. They should put those dollars towards debt reduction instead.

        2. I had 400 of the ATLCP at 16.5 a writer on SA would go in depth into the company and its finances (he only wrote on ATLC? hmm?!!) anyway the reviews were pretty good for SA, so that and a review of the co by me had grab some in the March bank swoon because they had so much cash on the books at the time. I sold in the pfd recovery last summer at 22. Now given the int rate scenario and their subprime lending profile customers, I will pass. I am happy in Grid and Tim type ‘safer’ issues for my pfd/bb allocations now. Bea

          1. Bea, I have largely eliminated most credit risk issues from my stash. And in turn have replaced that with more reinvestment, sector, and single company risk. If it aint one thing its another! Oh well like Sinatra (or was it Elvis), I did it “My Way”.

            1. I’m sure you’ll be glad to know and it will change your life to know that “My Way,” is actually a Paul Anka song if you’re crediting writers not performers of…….Zzzzzzzzz

              1. Yes Grid me too, pulling in risk a lot. Personally, I like the Miley Cyrus version of My Way which was done as a tribute to Bill Murray..kinda cute, she has a powerhouse voice…but music is a personal thing for sure. I have a great collection of EP’s from the 1950’s of Sinatra and others. Singers who sang songs, you could understand the words, great voices and no autotune! lol. No one defines doing it Her Way more than Bea I think (much to the chagrin of many. ! ) Best to you guys as January wraps up, Grid and 2WR.

                1. Sounds like you folks are grabbing your seats and getting ready to sit out the next song and dance. :<)

                2. Bea, you are spot on. Investing aside, which you are top notch in, nobody does “Bea” better than Bea. I love it when you get on a roll on SA with the zingers and quips. Ok, I will now bail us all out with a stock comment, so no “thread police” come out even though its Saturday, ha.
                  In the “baby bond” world I noticed CGBDL has retreated strongly recently. I flipped these well over $26 not too long ago, and renetered at $25.60 yesterday. Its first payout date is 3/1 and it should have an additional 10 day stub added on to its first initial 8.2% interest payment.

                  1. comment police, yep..I try not to post non essentials during or before market hours anyway. I just have too much downtime on my hands in caregiving.
                    The Atlanticus guy on SA has posted more notes on the offering and company for more background in his comment section. Again not for me. (I have an original Paul Anka EP of ‘Diana’from the 50’s..yes he was a great. )

                    1. I had a beef with Paul Anka. He stole my mouseketeer love away from me, Annette Funicello.

                    2. Annette Funicello, Zwei. Wow.

                      I sure liked her when I was little. Tried to watch her every day I could, but she was actually before my time.

                      When I was a kid on the res, we only got one TV channel and it was UHF. It only showed re-runs of old shows from the 1950s and we (kids) all just assumed they were all “current”. So, I grew up with the Mousketeers, Howdy Doody, etc. even though they had been off the air for years.

                      Caused some interesting conversations when we moved into a town with kids who had been experienced “real” TV.

                    3. Thanks for the brownie points Bea, My wife is a music show lover. I am not. But I showed her the link to YouTube on Mabel King you posted. Even I liked that performance.

              2. Yes, I knew that, but he didnt chart the song, just wrote it. Though I actually did for some reason have Anka’s own version from an 8 track way back in the day, ha. I liked it too.
                Although its generally known to be Sinatra’s song, I was born at a time too young to have heard Sinatra’s version on airways and was a young teenager when Elvis’s version was released. So therefore I actually viewed it as an “Elvis song” until I was older to know the history of it.

                1. Fascinating business, the music business….. “just wrote it” is a way to make zillions when you write a song like “My Way” that’s recorded by everyone every year…. Always fascinating also how money is split between performer, writer and publisher…. Many a naive song writer and performer entered the music business knowing nothing of the business side and got ripped off by those who did know… Also amazing to find out that McCartney most likely became a billionaire more from all the publishing rights he owns than performing or song writing…. https://www.mplcommunications.com/

                  1. I think actually a Sid Vicious solo. My (vague) recollection is that Sid Vicious recorded his version of My Way after the Sex Pistols had split up.

                    1. It appears you are correct. I have never heard that version. Google says Anka seemed ok with allowing it though. The Sid V guy seems like he had all his oars in the water, lol…
                      In the end, Anka considered it a great call. “I was very amused by it. I was flattered that a punk like Sid wanted to do ‘My Way,’ someone who was into music totally different from mine.
                      “What he did worked as both a goof and a sincere take – which was a pretty amazing accomplishment.”

                      Vicious moved to New York City with girlfriend Nancy Spungen in mid-78, just after he recorded the song and filmed the scene that later appeared in Swindle. Spungen died in October 1978, and Vicious was arrested as the prime suspect. He was released on bail, and four months later, he died of a heroin overdose on February 2nd.

                    2. Hi Grid

                      I actually grew up in the UK and when I was a young kid the Sex Pistols were all the rage (they were the first real punk band and came from the East End of London). They were actually *banned* in the UK because of the song “God Save the Queen” which is not particulary nice let’s just say. When we were kids, we were not allowed to have their records (due to the fact that they were banned… so of course we all did). Sex Pistols records had to be purchased on the black market and you had to tune into radio Caroline or Luxembourg in order to hear them. So having a Pistols record was very cool indeed!

                      Sid Vicious played bass, Johnny Rotten was singer. Band member Steve Jones still has a lunch time radio show in the LA area currently which is quite popular.

                      You may know the Niel Young song “Out of the Blue Into The Black” – The lyric “The King [referring to Elvis] is gone, but not forgotten… this is the story of Johnny Rotten” Is the very same Johnny Rotten of Sex Pistols fame.

                      I move to San Diego county in the 1980 time frame. The kids in San Diego knew of the Sex Pistols, but as the records were legal, they were considerably less popular. Go figure.

                      “My Way” was entirely appropriate for Sid Vicious as he certianly did things his way.

                      Lest we judge the Sex Pistols too harshly, I once heard an interview with Pete Townsend (The Who) and I recall him saying that Sex Pistols’ “Anarchy in the UK” was modern day “My Generation”. I guess the more things change the more they stay the same.

                    3. This is probably a generational thing kind of comment but IMHO somebody ought to put out a vinyl LP called “The Very Best of The Sex Pistols” and leave the vinyl totally blank…… It might possibly win a Grammy in the category for Best Blank Vinyl LP, but I suspect it would probably get beaten out by “The Very Best Of Eminem” blank vinyl LP.

                      Shhhhh… nobody wake up the “thread police.”

                    4. August, I will admit I only have a vague knowledge of the group even though I was a younger teenager during that time. I just knew of them as having “cult status” but it never really sounded like music to me. But admittedly, what do I know. As an example, I am probably the only person who thinks “Play the Game” is Queens best all time song! 🙂

            1. of course! yikes! I see Ladenburg too..what’s Janney doing in there! I will have to call Guy Lebas or Mark Luschini …lol…I believe you have avoided Riley and so have I could never figure it all out. the Stars are doing well this year! Pens? not so much.. buncha oldsters.. looking fwd to baseball season starting myself. Take care Tim!

              1. Bea, At the book now…cleaned up on KC money line and Blues and KC money line parlay. $2k winning day! LA Kings won 2 of last 15 games and Blues winner of 4 straight were plus 140 dogs at home? Dumb odds, thanks for the dough DraftKings! Got one last bet 3 team ML parlay Blues, KC, and Detroit. $100 wins me $2300. Go Lions! I feel safer with sports betting than I do anything with Riley, ha.

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