Distressed debt

Investors in distressed debt look at the debt issued by companies which is “cheap” (as valued by the bond market).

A nice guide I found on valuing the debt.

I’ve been reading this article and looking on Degiro at some euronext bonds which if the prices are correct seem pretty overvalued to me.

Some of the examples I came across on Degiro are shown below. As an aside Degiro is a low cost broker worth looking at, there aren’t many bells and whistles but it has an app (iPhone at least) and you can trade some pretty interesting products like warrants on the Frankfurt and Stuttgart stock exchanges. There are also no account minimums so you can keep a small amount in to do some research on products.

One of the first “distressed” bonds I found was this listing on euronext issued by a company called AgroGeneration which produces grain and oilseeds. This bond comes due for repayment at the end of March 2019. At its current price (as of 3rd Feb) of €30 (shown in the screenshots below) this offers a potential mouthwatering return of 333% if only the bonds are repayed in full.
Agro

But herein lies the rub, this event is unlikely and in my opinion the probability of repayment is distinctly lower than the expectations of the market.

Agro 2

PUT BALANCE SHEET

Now, do you think this is value for money or is it not quite the right time for distressed opportunities and that things remain priced to “perfection”.

One potential opportunity

TEVA

Written on January 27, 2019