Saratoga Investment Corporation (SAR) has announced a new offering of baby bonds with a maturity date in 2027.
The business development company (BDC) has 1 other issue current outstanding with a 6% coupon and a maturity in 2027 as well. This issue is trading around $23.65/share right now.
The preliminary prospectus can be read here.
2whiteroses was right on top of this one.
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Priced at 8.00% Size = $40 mil Symbol will be SAJ Callable 10/27/24 Maturity 10/31/27
The old issue could take a thrashing tomorrow–trading with a current yield of 6.53–down 59 cents today.
Yeah, thought I was smart grabbing a tiny amount at 23.04, YTM about 8% as best I could figure. But wasn’t expecting new one at 8%….expect tomorrow I’ll be thinking I wasn’t so smart.
CR – It’s interesting to see how there could be some confusion as to what yields should be used for comparison when SAT is at a substantial discount to par and the new issue SAJ is at par. You seem to be thinking that because your CURRENT YIELD is only 6.51% that SAT ought to take a beating from 23.04 because the new issue is 8% current……. Your YTM on your purchase is I believe 8.34% @23.04. That doesn’t look bad to me in comparison assuming SAJ is a successful deal.
To take this to the extreme, for SAT to have an equivalent current yield to the new SAJ, it would have to drop to 18.75…. AT 18.75 SAT’s YTM becomes 13.47%! I think I’ll put out bid on SAT at 19.40 to give any seller the chance to sell their SAT to buy SAJ and pick up 25 basis points in current yield just in case.. Boy will they be taking me to the cleaners if I get hit..;)
Yes, when I tried to calculate YTM, I felt better. I guess it really depends on how the market reacts–to both issues, before one can actually compare.
You happen to see our old friend Landenburg Thalmann is one of the book running managers?