countrywide bonds

[dochesgriff]

Hey guys,
How do you get quotes on corporate bonds? I hear that you can get countrywide bonds for under .80 on the dollar with a 6% coupon. I think they will bounce back and the bonds will be worth something sooner than later. What are your thoughts?

[aiki14]

Hey guys,
How do you get quotes on corporate bonds? I hear that you can get countrywide bonds for under .80 on the dollar with a 6% coupon. I think they will bounce back and the bonds will be worth something sooner than later. What are your thoughts?

Here's a Nov 2030 bond they offer with a 6% coupon selling at 82 yielding 7.66% callable in Nov 2010. Cusip is 22238HAS9

Here's a good site, enter countrywide in the issuer box and it will call up all their bond issues.
http://www.investinginbonds.com/marketataglance.asp?catid=34

Once there click on run calculations for details.

[TonyM]

Another bankruptcy candidate imo, credit line to be cut off soon...again jmho. Talked to a friend who is a long time real estate agent yesterday...she showed me a list 4 pages long of mortgage companies she can no longer use and was telling me of several instances of failed closings due to no funds from various mortgage companies. Bottom fishers beware, the Marianas trench may be approaching.

[dochesgriff]

Thanks for the info. I am loving that site.

Anyone else looking at bonds or am I the only crazy one? I just think that if the Fed lowers in Sept these will look better and then if things settle down they will run up.

[Lou]

I do believe if they file for bk the bonds survive, so you should be pretty safe. For a 6% yield you can get a muni bond and pay less taxes.

[netwrangler]

I do believe if they file for bk the bonds survive, so you should be pretty safe. For a 6% yield you can get a muni bond and pay less taxes.

Brings up an interesting point. In a bankruptcy what are the odds of the bonds being [worth/paid off at] face value vs. market value?

Scenario #1: The bonds are paid off / substituted for / or otherwise honored at market value. The risk, then, is that interest rates go up between purchasing the bond and the "market value" settlement in bankruptcy -- in spite of, or maybe because of, the FED.

Scenario #2: The bankruptcy agreement "liquidates" the bonds at face value. That doesn't seem likely to me, but what I know about how bonds are handled in bankruptcy could be written in a very small book. The potential gain here is the difference between market price and face value.

Thoughts?

[aiki14]

In a bankruptcy, assets and proceeds are distributed to satisfy claims in order of the claims' priority. Investors who take the least amount of risk are paid first. As a result, creditors and bondholders who lend a company money will be paid before its stockholders, who have purchased an ownership stake. Creditors are paid after legal and administrative costs have been covered.

Secured creditors, whose claims are protected by specific assets or collateral, such as real estate, are paid first.

Then unsecured creditors, which often include bank lenders, bondholders and suppliers, are next in line.

Stockholders, who have purchased a portion of the company, are paid last, if there is money available after the secured and unsecured creditors' claims have been paid.

Helpful link:
http://www.investinginbonds.com/

[netwrangler]

In a bankruptcy, assets and proceeds are distributed to satisfy claims in order of the claims' priority. Investors who take the least amount of risk are paid first. As a result, creditors and bondholders who lend a company money will be paid before its stockholders, who have purchased an ownership stake. Creditors are paid after legal and administrative costs have been covered.

Agreed! My question was, in paying off the bond obligation -- and assuming that this obligation will be paid -- does the bankruptcy court use

the face value of the bond [that is, the nominal amount owed]
the market value of the bond [that is, what you could sell it for]
or the DCF value of the bond [that is, what the bond would sell for at current market interest rates] The difference between this value and the "market value" would be some kind of risk discount.

I admit this is an academic point. Moreover, I agree that your response is useful to most readers. That said, I'm still curious.

[aiki14]

Agreed! My question was, in paying off the bond obligation -- and assuming that this obligation will be paid -- does the bankruptcy court use

the face value of the bond [that is, the nominal amount owed]
the market value of the bond [that is, what you could sell it for]
or the DCF value of the bond [that is, what the bond would sell for at current market interest rates] The difference between this value and the "market value" would be some kind of risk discount.

I admit this is an academic point. Moreover, I agree that your response is useful to most readers. That said, I'm still curious.

Bankruptcy court uses face value, the market value is subjective, and the interest rate is zero because once a company files for bankruptcy the P&I payments stop and they go into default.