B Riley Prices New Baby Bond for a Refi

This issue was noted and discussed on the Reader Initiated Alerts page by many different folks yesterday–thanks.

Financial services company B Riley (NASDAQ:RILY) has sold a new issue of baby bonds. The company plans to redeem their 7.50% 2021 bonds (RILYL) with the proceeds.

The new issue of 4 million shares (bonds) will be priced with a fixed rate coupon of 6.50%. The bonds will have a maturity date of 9/30/2026. There are an addition 600,000 bonds available for overallotment.

Like some other B Riley issues these baby bonds can be redeemed early with bonus rates. On or after 9/30/2022 to 9/29/2023 at $25.50, on 9/30/2023 to 9/29/2024 at $25.25 and after this time at $25 plus accrued interest.

The bonds are rated BBB+ by Egan Jones, although they are not what we normally consider a “major” ratings agency. I believe these baby bonds would be considered “junk” rated by either S&P, Moodys or Fitch.

These bonds will trade under the ticker RILYN. There will be no OTC Grey market trading.

The company has numerous other baby bonds outstanding which can be seen here.

The pricing term sheet can be found here.

17 thoughts on “B Riley Prices New Baby Bond for a Refi”

  1. I’m not sure if this has been posted anywhere yet but RILYN is trading at Schwab at slightly above par at 25.14

    I’m passing on this issue for now; I have a full position on other RILY issues currently.

  2. I will take a pass on RILYN. I looked the company over this morning and it’s just a bit too far out there for me. I’m still de risking and this doesn’t fit.

    The mix of businesses is a bit odd to my eye and the consolidated balance sheet is debt-heavy and the debt is growing.

    I’ll take less to SWAN.

    1. The article makes me more convinced that rates are going to continue lower, which could boost equities for a while, maybe a long while.

      In my fixed income allocation, I am moving as much as I can into noncallable IG preferreds. I do not want to buck a trend that will likely grow stronger or at least continue for the rest of my days.

      And energy energy energy. The growing world population demands it for a better life. Will renewables grow? Certainly. Can they replace all fossil fuels in the time frame envisioned by the Green New Deal? I’m betting no. IMO the GND is a recipe for disaster. And let’s see what results from the recent step-up in attacks on Saudi facilities. More chaos and uncertainty in the ME oil fields I’d imagine.

      So the other end of my barbell from my solid IG preferreds is energy, almost exclusively North American and mostly the best of breed MLPs.

      That barbell is also where my reinvestments go. It’s a strategy I think will last me out. Just keep paying me. No flipping or any other cuteness. I’ll leave that to the more adept of the relative youngsters here.


    2. I see it as a good time to take some profits on my higher yielding issues. Don’t want to be caught in a wave of bankruptcies. Putting the money in safer lower yielding issues where the biggest risk is a sudden jump in rates, or just waiting in 2% cash. I’m still doing as much swing trading, since I don’t hold them I don’t own too much risk at the same time.

    3. I hope that we do not follow Japan and Europe into that good night.

      If you’re going to stimulate I’d rather see fiscal stimulus. Build a few more bridge or something.

      So little thought has been given to the draconian impact of what artificially suppressed rates do to people’s lives. Yes, some are huge beneficiaries but they are stealing food from the mouths of others. Like most of the folks here.

      The media needs to take its collective eye off the “social justice” crap, which is nothing but taking from Peter to pay Paul, and pay more attention to the 50+ million people that bad monetary policy is taking to ruin.

      The Fed needs to get out of the business of aiding and abetting politicians, of both major parties.

      In my ever humble opinion.

    1. George, it hasn’t been announced yet. Likely, RILY needs to let the dust settle from the new offering and have the monies roll in and then they will make the announcement. Stay tuned. We’ll alert you to it in quick order here on the site.

      1. RILYN was scheduled to close on 9/23. So with cash being officially in hand at that time, the most conservative guess for call date would then be 10/23, 30 days later. My second guess would be they wait till 10/31 to coincide with the full coupon payment.. If paid on 10/23, total should be no less than 25.4493.

        1. Oooops!! Miscalculated….. 25.43229 would be the most likely or at least the most conservative payout on 10/23… The fact that interest is figured on a 360 day year always throws a wrinkle in making an accurate calculation, but it would be no less than 25.43229 if call date = 10/23.

    2. The date for Optional Redemption but will likely be as 2WR suggests. There is no call for this issue.

      The redemption price will be $25.00 per note plus accrued interest, if any.

    3. Hey George, RILYL should be redeemed at $25 par value. Some of the newer notes have premiums attached to early calls, but not RILYL …and if I had to guess, the redemption date will most likely be on 10/31/19.

    1. James – typically these trade within a week–and different brokers may lag a day or two. Unfortunately with the baby bonds there are no hard and fast rules on when they trade–and no one blows a horn when trading starts. If you watch the Reader Initiated Alerts page no doubt some will report trading on there. I typically check eTrade and Fido everyday for new baby bonds I am interested in.

  3. When I see Egan-Jones and Ladenburg Thalmann on an issue I usually run for the door, but I will look at this one.

    Comparing RILY issues to each other is a bit tricky because of the bonus call feature on some issues. Some have it, some don’t, and those that have it may be at different amounts at any given point in time.

    For that reason, I look at both yield to earliest call (including the call bonus, if any) and YTM. Then average them, sort of. On that basis the best of the outstanding issues is RILYO. RILYN, if it starts trading at par, will have nearly identical yields to the O. 7.1% YTC and 6.5% YTM.

    This is a baby bond, so ordinary income. Best in a qualified account. A Roth ideally.

    1. I would rather buy RILYN under 25.30 yielding 6.5 rather than buying
      RILYO at 25.70 with ex div on 10-11 of .42= for an adjusted price of 25.28.
      The N issue 1st call is 16 months further in the future than the O issue.

      Am i wrong?

      1. Newman – if you’re a long term hold I would be going for he O, assuming it breaks from the gate at about par.

        Flippers might prefer the issues closer to call date, on the theory they can avoid being run over before a call comes.

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