I want the boards feedback on this swag | CTL Message Board Posts

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Msg  159029 of 159941  at  4/17/2019 3:47:15 PM  by

jojogumabew


 In response to msg 158992 by  toddforthree
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Re: I want the boards feedback on this swag

The simpler explanation is bond interest/principal repayments have become far more probable given the dividend cut. It's a direct transfer of free cashflow from equity holders to debt holders, hence the perceived payment risk is lower, bond prices are higher and YTM's are lower.
 
I don't believe CTL can buy back bonds in a material way without informing the public. In addition, most of the time for CTL it doesn't make economic sense because of the make whole provision. If the bond they are buying is below par (one series is), it can be deemed as a debt restructuring and a selective default by issuer.
 
The near term bonds of CTL trade at 4% YTM but the coupons are much higher. Better to wait and pay off as they mature (saving the coupon rate which can be as high as 9%) vs buying at premium (for only 4% ytm). It would be better for CTL assuming they hit debt ratio and earnings targets to buy back equity and save an after tax dividend yield of 8%.
 
In terms of equity prices, analyst upgrades/downgrades, harsh language, speculation etc can bump prices a little bit but what really matters are earnings results and realistic expected earnings (and revenue as it impacts earnings). +/- 20% PPS change isn't that meaningful, it's just the typical volatility of the stock market. 
 
Of course we all know this already and we are all just antsy - me included. Anyway, I am rooting for JS etc to succeed and to get a 2x from here in 12-24 mos.
 
 
 
 
 


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Replies
Msg # Subject Author Recs Date Posted
159031 Re: I want the boards feedback on this swag Zver1 0 4/18/2019 7:58:30 AM


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