Reading of Denis O'B's travails has got me interested in bonds, not least in junk bonds.
https://www.irishtimes.com/business...l-assets-of-500m-to-cut-debt-burden-1.3537943
One thing I don't get is this bit:
While Digicel is said to be planning to refinance within the next 12-18 months some $2 billion of bonds that mature in September 2020. However, the value of the notes have fallen to 77.5 cents on the dollar from 100 cents earlier this year, amid a broad sell-off of debt across emerging markets this year and as investors monitor the telecoms group’s own performance.
The bonds move has sent the market interest rate, or yield, on the debt to 21 per cent from 8 per cent.
If the nominal value of these bonds was 100c, then their 'coupon' was 8% and therefore the new current interest rate should be 8/77.5 = 10.3% . . .
Or am I missing something here ?
https://www.irishtimes.com/business...l-assets-of-500m-to-cut-debt-burden-1.3537943
One thing I don't get is this bit:
While Digicel is said to be planning to refinance within the next 12-18 months some $2 billion of bonds that mature in September 2020. However, the value of the notes have fallen to 77.5 cents on the dollar from 100 cents earlier this year, amid a broad sell-off of debt across emerging markets this year and as investors monitor the telecoms group’s own performance.
The bonds move has sent the market interest rate, or yield, on the debt to 21 per cent from 8 per cent.
If the nominal value of these bonds was 100c, then their 'coupon' was 8% and therefore the new current interest rate should be 8/77.5 = 10.3% . . .
Or am I missing something here ?