IDB Holdings Serie D bonds are paying 50%. The reason is simple: no one wants to buy them. Why? IDB's net capital is minus 1,000 million shekel (250 M$) and worsening. Sales are decreasing. The shares are 60% down and that creates a problem: the bonds are secured by shares and today the market value of the shares is LOWER than the outstanding debt.
The situation is not acute, as the bonds mature in 2020 and pay 5% yearly indexed interest. The company is selling properties (like HBSC building in NYC and Nesher Cement) and is full of cash. According to Nochi Dankner, the company is liquid for the next two years. The problem is that the banks may call their loans secured by IDB Holding shares, that are very cheap.
Yesterday I bought some of its bonds. I think the risk is worth 50% profit. Pic.: Crazy Harry. PS: This morning bought MORE.