Wednesday, May 6, 2015

Walter Energy and Molycorp Bonds Dumped Today

A million of the WLT 2021s (8.5%) traded at 8 cents today. I believe these are trading flat, and are owed a coupon (4.25 cents) no later than May 15 or the company is in default.

A million+ of the Molycorp 3.25s due next March traded at 4.5 cents! That is a 649% yield to maturity!

A million+ of the Molycorp 6s due 2017 traded at 4.75 cents for a 240% yield to maturity!

Notice the inverted yield curve on Molycorp. They are both trading for ~5 cents because they are trading based on de minimis recovery possibility, not based on yield.

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