BOUGHT 100 of the TC FJA

I bought 100 of the TC FJA at $15.35 which has as its underlying bond a senior note issued by Embarq.  Shortly after my purchase, this TC fell to a 14.9 bid and a 15 ask.  Virtually all of the TCs are thinly traded almost all of the time.  Trading is pretty much dominated by individual investors, so small orders can swing the price up or down. 

The underlying security has a coupon of 7.995% and matures in 2036.  The TC matures on the same date but has a lower coupon at 7.1%.  The ex interest date is near the end of this month for the semi-annual payment. FJA Stock Quote - Pplus Tr CTF 

I was not aware of this one until I started to peck around at the QuantumOnline site.  QuantumOnline.com

This is a link to the prospectus, and the Quantum site also provides these kind of links. http://www.sec.gov/Archives/edgar/data/1401284/000094787107000850/pplus-class_a.htm

The bond is currently rated at the lower rung of investment grade by Fitch at BBB- Fitch Corporate  The Quantum site provides the rating from S & P and Moody's.

I am mentioning the rating for this Embarq bond just to say now that it is irrelevant.  Embarq is in the process of being acquired by Century Tel (CTL).  Both Embarq (EQ)   and Century Tel are phone companies.   So I went to the FINRA site to find out about Century Tel bonds.  The only CTL bond that has a  maturity close to the Embarq bond and has some trading activity is one that matures in 2028 and it is being priced to yield at around 9.7% to 10.6% depending on the day and the size of the trade.   Fitch gives it a BBB - rating. The FINRA site also provides the bond rating information for free. FINRA - Investor Information - Market Data - Bonds - Bond Detail

LB is just starting the analysis on this one.  So the ratings are about the same for bonds issues by both companies and it looks like Century Tel will soon be the surviving company.  The yield at a total cost of $15.35 for the TC FJA is around 11.56%, so I pick up around 1 to 1 1/2% compared to the 2028 Century Tel Bond.  I also can buy the TC much easier and I do not want to invest more than I just did, partly due to the fact that my familiarity with Century Tel is  of recent origin and originated  from my interest in this recently discovered TC.   I did read the Morningstar report on CTL.  I also reviewed CTL's recent earnings release CenturyTel Reports First Quarter Earnings - MarketWatch I am always cautious even with debt purchases when the company has a boatload of debt, and CTL and Embark combined will have close to 8.7 billion in debt.  So it is best to err, at least for me, on the cautious side.   The wild and crazy RBs can reach a different conclusion.  

I doubt that I would hold this bond to maturity.  If I did, I would also realize close to a $1000 profit on the shares in addition to the interest payments, assuming I am paid at maturity.  

This is a link to my Gateway Post on Trust Certificates. Trust Certificate Links in One Post

A few of my TCs are ex interest today, including JZV, JZJ and JZE.  

ADDED:  This is the link to the FINRA page for the underlying bond.   FINRA - Investor Information - Market Data - Bonds - Bond Detail

DISCLAIMER

  I am not a financial advisor but an individual investor trying to navigate my way through a difficult market. I have never worked for a financial institution and never will.  In these posts, I am acting as an unpaid financial journalist and an occasional political commentator.   I am also aggregating financial news stories that I view as important and providing readers of these posts with links to those articles, sort of a filtered, somewhat intelligent, free search engine.  Any discussion made by me of particular securities  is not a recommendation to buy or to sell.  Trade at your own risk.  Consult with your financial advisor prior to making any purchase or sale. I will try to identify my sales too but it may take a few minutes after I implement them to create a post explaining my reasons.  The sale may before or after the post.  Before buying or selling any stock, even one recommended by a trusted financial advisor,  please research it and make up your own mind which is what I always try to do.  Research would include reading reports, reviewing financial records, earnings estimates, sec filings and prior earnings releases and news.  In this post, and all others by me, I am merely describing my reasons for purchasing  or selling securities, and the potential pitfalls that I identified prior to purchase or the reasons for a sale.  The securities mentioned in this and all posts written by me may not be suitable for others based on their unique financial position and risk profile.  By way of example, it is unlikely that I will ever need the funds contained in my retirement accounts. Always read the prospectus before buying a Trust Certificate, bond, preferred stock or other bond or bond like investments.  Information contained in my posts has been obtained from sources believed to be reliable but cannot be guaranteed.  It is always important to follow the investment process. the investment process/links to further information on canadian energy or royalty trustsInvestment Process Part II: Bonds and Bond Like Investments   NOT A RESEARCH SERVICE/Add of PWE Last Week   These posts by me do not constitute investment advice, nor shall they be construed as a guarantee of future results, or as an offer of any transaction in securities.   All content in these posts is provided for informational and entertainment purposes only, and it is a form of entertainment for me.  Anyone interested in a topic may want to review all discussions contained in the blog about it by using a relevant search term in the box at the top. Opinions are subject to change and they certainly evolve over time as information is assessed and analyzed for compatibility with prior opinions, the only process for a serious investor, and a topic of frequent discussion in this post.