Global Ship Lease Prices Baby Bonds

Container ship owner Global Ship Lease (GSL) has priced their previously announced $25 baby bonds.

The issue will carry a coupon of 8.00% and the issue will mature in 2024.

An interesting side note to this issue is that B Riley recently (10/01/2019) took a 11% position in the company and will be buying $2 million of this new issue.

Note the bonus rate for early redemption.

The pricing term sheet can be read here.

15 thoughts on “Global Ship Lease Prices Baby Bonds”

  1. GSLD now showing up on TDA, but no information – no price, no bid/ask, no nothing… Are they just getting ready for it to hit the streets? I was able to put in an order at $24.50 just for fun. TDA still charging $6.95 for these though 🙁

  2. Too scared of these shipping stocks:-(
    The only ones am willing to hold are the niche players HMLP and KNOP.

    1. Malka–I wouldn’t be afraid of the shippers, but would have them on a short leash. Of course everyone is different. I hold one shipper and am not a fan of them–but at the correct risk/reward–an an economy that is decent I will hold some.

  3. What about the B notes? Trading right around $25. Aren’t those the ones just upgraded to B+? Well, I guess GSL was upgraded, but wouldn’t that lift the bond rating as well?

    Is there foreign tax on these since they are based in the Marshall Islands?

  4. Bholey,
    This is a baby bond and has a ticker – GSLD and not a CUSIP

    I’m very interested in getting a position in this one at or below par.

    1. Greg, GSLD has not broken syndicate as of this morning (means it hasn’t traded away from the selling group and lead underwriters). We are in such a low interest rate environment, I would believe that GSLD will drive higher for those that need more yield and will take on more risk as this is junk rated. The parent (GSL) has a very small market cap of just $136ish million, has a negative “profit” margin of -16.69%, “their return on equity is NEGATIVE -13.33%, have a whopping $868+ million of debt, are not profitable (loss) -43.7 million, cash on hand of $86.7 million and the proceeds from this baby bond offering will not go to their bank as its being used to redeem a higher couponed (!) issue. Of interest is B Riley has a 11% stake in GSL.
      Creditors have better memories than debtors.” ― Benjamin Franklin

      1. Definitely a turn-around story here Nomad. As you know, shipping is very cyclical. They had a toxic setup before (would have never even looked at buying them then). In my opinion, they are definitely doing things right now and look much better going forward.

        Please do you own due diligence, I think at the rate and terms this is a good bet.

  5. The early redemption features are attractive, both for the company and the investor. Provided there are no gaping holes in the GSL balance sheet, I’d be a buy and holder here.

  6. “I do not find a current credit rating on this issue, but Standard and Poors did recently raise the companies rating on some other notes to B+.”

    Were the other notes also unsecured? If so, any reason to believe these notes shouldn’t also be B+? 8% seems very high for B+ though.

    Seems like a conflict of interest to let your banker who’s setting the price of your security to also buy 11%. Their interest isn’t in getting the lowest possible coupon. GSL probably doesn’t know any better and RILY is probably saying “sweet! got me an 8% B+ yield and charged a 3.5% underwriting discount to boot!”

  7. Tim, thanks sir.
    Correction on the Date of Issue: 11/14/19 (not 10/14/19).

    I don’t know how common this is, but there is also a “change of control” redemption feature (price is 104% plus accrued and unpaid interest, if it occurs before 12/31/2021).


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