Just a note that folks pondering a current investment in the new baby bond from BDC (business development company) Trinity Capital (TRIN) need to recognize the terms of the issue.
I am referring to the 7.00% notes due 2025 (TRINL).
This issue has a very–VERY short optional redemption date of 1/16/2023 and a maturity date of 1/16/2025. It is a rarity to have an exchange traded debt issue with dates this near.
The issue is trading around $25.70 right now meaning the yield to worst is already near ZERO (I didn’t do the exact calculations). It is unlikely to be redeemed in January, but one never knows. Also with a maturity date that is only 2 1/2 years away the yield to maturity is more meager than it appears on the surface.
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This is a venture capital firm that’s only been around since 2019 and has a market cap of under $500M
Lots of debt and the 3 top execs each have salaries over $1M
Seems like they are making bets with OPM.
I would want to know more about the execs track record and history before handing them my money.
On the plus side, although TRIN is a venture capital oriented firm, it is also a BDC and, therefore is subject to the limitations imposed on BDCs by the 1940 Act.. “As of the date of this prospectus, these provisions generally prohibit us from incurring additional borrowings, including through the issuance of additional debt securities, unless our asset coverage, as defined in the 1940 Act, equals at least 150% after such borrowings.” Though that protection isn’t as strong as it used to be (it was 200%), it should offer some additional comfort to note holders.