Saratoga Investment Prices Baby Bonds

Business development company Saratoga Investment Corp. (NYSE:SAR) has priced their new baby bonds with a coupon of 6.25%–a bit disappointing to us, but it seems we are always disappointed–we always want more.  We will have to let the marketplace speak as to the pricing.  We suspect the bonds will have plenty of demand as it is a smaller issue of 1,400,000 shares with another 200,000 reserved for overallotment, but likely will have a limited upside to the price once trading commences.

The new bonds will trade on the NYSE with a permanent ticker of SAF.  There will not be trading on the OTC Grey market of this issue prior to permanent trading on the NYSE.

The new notes will have a maturity date of 8/31/2025.  The normal terms apply–quarterly payments, non qualified interest will be paid and an early redemption period beginning 8/31/2021.

The preliminary prospectus can be found here.

The pricing term sheet can be found here.

Saratoga Investment currently has 1 other baby bonds outstanding and the information on that particular issue (which carries a 6.75% coupon) can be found here.

Even though we are not impressed with the coupon on this issue we may well take a small 200 share position in the Medium Duration Income Portfolio which has about a 7% cash position so could invest with cash on hand.

8 thoughts on “Saratoga Investment Prices Baby Bonds”

    1. I just filled a small starter position of SAF at 24.90. Wishing you profitable investing, Nomad

      1. Hi Nomad–just entered a small order–hopefully can fill at a reasonable price.

    2. Thanks Keith–I have been waiting all week as eTrade had the ticker in their database Monday. I have a small limit order in.

  1. Tim – When you say a baby bond’s maturity date is 8/31/2025, such as this one, does the company have to call it, or can they just continue to pay the interest, like a preferred? I know, basic question, I’m learning.
    Glad I found your new site, followed you for years on the old one.

    1. Hi Mowdelawn–glad you found us.

      On issues such as this Saratoga issue there are no options but to pay at maturity (or they can redeem the issue earlier). Sometimes some of the large utilities have options built into their terms where they can ‘defer’ interest payments without it being a default–not the case here.

  2. prudential is now trading at least through Fidelity. More information in the new issue area section.

    symbol is PRS for those that are interested. $24.90 /share

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