B Riley to Offer More Baby Bonds

Financial company B Riley (NASDAQ:RILY) is once again coming to market with 2 million shares of a baby bond.  The issue is not yet priced.

The bonds will mature in 2023 and will have an early redemption optionally available to the company starting in 2020.  The early redemption starting 9/30/2020 would be at $25.50 then going to $25.25 starting 9/30/2021 and then after 9/30/2022 at $25.

As we all know the company has come to market many times in the last couple of year and last sold an issue of baby bonds on 5/14/2018 with an issue priced at 7.375%.

You can see how this new issue will stack up (once it is priced) on the $25 Master List here.

The preliminary prospectus can be found here.

 

14 thoughts on “B Riley to Offer More Baby Bonds”

  1. Again? Shew! Still long RILYG, Z, and L flavors…

    Must be burning the cash to keep warm during cool evenings?

    1. I sold all my RILYH yesterday as they jumped 70 cents plus since I bought a month or 2 ago. Used the dough to try the GLIBP issue. I may take head from Kaptain Lou and stay away for awhile.

      1. I also decided to bail out of RILYZ at essentially break even – but got 1 dividend out of it. So many issues within such a short period of time raises a red flag for me, and LTS being involved does not add any comfort ( confidence is more accurate ).

  2. Unless my math is wrong, the current baby bonds issued by B. Riley now exceed one third of its market cap. They’re not quite at LTS-A levels but they certainly seem to be heading in that direction. I own the RILYL but I’m beginning to have second thought. And Eagan-Jones put the standard A- rating on these new ones. Eagan-Jones sounds like a joke. How can LTS-A and the RILY issues all have the same rating unless A- means anything from junk to investment grade in their eyes. Sounds like all these firms just pay a fee for the standard A- rating.

    1. Oh..and Ladenburg Thalmann is one of the book runners for this issue. Makes one wonder if the management at B. Riley has been studying Ladenburg’s playbook.

      Am I beginning to sound cynical ?

    2. I suspect Egan would review my net worth and declare it possible for me to personally buy out Bezos and take Amazon private, lol. I am not a balance sheet whiz, but most of this debt is short duration. If something happened it may be a mess to try to roll it over. I know they have been acquiring companies and are profitable but still ,its a fast paced financial company that kind of worries me a bit. Probably fine, but I still stay away for awhile personally.

  3. NCZIP now trading around $24.85/share. This is the preferred (5.5%) of their closed-end fund NCZ (Alliance Convertible Income Fund II).

  4. I am long RILYL and RILYZ, IF they were perpetual I would sell them immediately and take my profits. Since they are real notes RILYL to 2021 and RILYZ to 2027, they fill up part of my maturity ladder and it’s hard to find quality replacements with decent yields for less than 10 year maturities. I’m holding on and will call the company in the next day or so to make sure their story is still intact. Stay Tuned, Nomad

    1. Nomad, If one is committed to RILY someone may be able to make money on trading if last scenario plays out again. The outstanding bonds dropped when last issue came out then they recovered.

  5. At least for my risk profile, I’m avoiding the RILY issues for now. While I like the idea of term preferreds, the company seems to be issuing them at a very fast pace right now and this continues to concern me.

    1. Thanks Jay–This is ridiculous–someone has their head up their —.

      Hopefully the marketplace will display is displeasure. This should trade at 24.25-24.50 unless I am missing something.

  6. I made a bundle over the last 2 days with thousands of RILY bonds. Was very good trading. I wish i could have held off and keep them, but when the buying price is a huge spread, and with the fog of the new release…

  7. The most recently issues RILY BB is the H. It’s selling at a SY of 7.10 and a YTC of just 5.0% That’s after a nearly one dollar run up in the last month. Other RILY issues, the G and the Z, both had big increases, too.

    I can imagine that’s what the company and underwrites were looking at when they priced the new issue at 6.875. Plus they threw in added call protection.

    This might not trade down as much as the coupon suggests.

    That said, I still don’t like all the debt the company is taking on. I’m in for 1,000+ shares of the L but it’s under close scrutiny.

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