Oxford Lane Capital Baby Bonds

[BMK]

Just like kmi, he doesn’t want to pay commission, why would you want to pay commission plus management fee.

@kmiklas was talking about buying new issue treasury securities through Treasury Direct to avoid any commission or markup, and then selling them through a retail brokerage account.

My original post was about something completely different: baby bonds issued by Oxford Lane Capital that are currently available on the secondary market, at a discount to the par value of $25. They have a maturity of under three years. The symbol is OXLCZ.

I have not checked the math, but according to the article that I attached, they have yield to maturity of almost 8.5%.

I am not trying to avoid commission LOL. If I buy these things, I plan to hold to maturity.

Although they are technically bonds, they trade like a preferred stock. Retail brokers don't charge a commission to buy or sell these things. Yes, there is a bid/ask spread, someone has to make money somewhere, I get it.

But my original post was just looking for opinions and feedback on how risky this stuff is.

Oxford Lane is a CEF that invests in CLOs. When I first saw that, my immediate reaction was why the f**k would I want to invest in collaterized debt? That's what caused the Global Financial Crisis in 2008 LOL

And they invest in the equity tranche, which is pretty far down the pecking order.

But the article from Seeking Alpha (which is attached to my original post) lays out a pretty good case for why these bonds have a very low risk of default. And the other links that I posted make it pretty clear that CLOs are not the same product that caused the subprime mortgage meltdown.

If I buy these, it would be a very small portion of a portfolio with a mix of fixed income products, ranging from treasury securities to investment grade corporate bonds to preferred stock, and possibly more esoteric stuff like OXLCZ.

And I was just looking to hear what other people think. I don't care about commissions LOL

 

[mervyn]

your judgement call, like Pershing Square.

 

[BMK]

like Pershing Square.

I don't think Pershing Square bonds are available to retail customers in the USA.

If they are, they are certainly not baby bonds

And I don't think Pershing Square holds CLOs

I don't see how OXLCZ is "like Pershing Square"

 

[mervyn]

These prefer or unsecured notes for small manager is easy to fool. Issuing debts at a fixed rate, using the money to buy a higher yield produces, pocketing the difference as revenues to the shareholders. If your tranch defaults, it is not manager’s fault. Loan assets valuation can be worked out. It’s a business for sure.

 

[kmiklas]

@kmiklas was talking about buying new issue treasury securities through Treasury Direct to avoid any commission or markup, and then selling them through a retail brokerage account.

My original post was about something completely different: baby bonds issued by Oxford Lane Capital that are currently available on the secondary market, at a discount to the par value of $25. They have a maturity of under three years. The symbol is OXLCZ.

I have not checked the math, but according to the article that I attached, they have yield to maturity of almost 8.5%.

I am not trying to avoid commission LOL. If I buy these things, I plan to hold to maturity.

Although they are technically bonds, they trade like a preferred stock. Retail brokers don't charge a commission to buy or sell these things. Yes, there is a bid/ask spread, someone has to make money somewhere, I get it.

But my original post was just looking for opinions and feedback on how risky this stuff is.

Oxford Lane is a CEF that invests in CLOs. When I first saw that, my immediate reaction was why the f**k would I want to invest in collaterized debt? That's what caused the Global Financial Crisis in 2008 LOL

And they invest in the equity tranche, which is pretty far down the pecking order.

But the article from Seeking Alpha (which is attached to my original post) lays out a pretty good case for why these bonds have a very low risk of default. And the other links that I posted make it pretty clear that CLOs are not the same product that caused the subprime mortgage meltdown.

If I buy these, it would be a very small portion of a portfolio with a mix of fixed income products, ranging from treasury securities to investment grade corporate bonds to preferred stock, and possibly more esoteric stuff like OXLCZ.

And I was just looking to hear what other people think. I don't care about commissions LOL

Honestly these baby bonds are tempting me. They invest in high-risk, high-yield assets, but mitigate risk via diversification, and another layer of preferred stock to protect the bondholder. They offer a nice return. Yes they take a cut… but they’re managing the fund.

It’s similar what they did with MBS in 2007. Although it went-belly up because they went too far, investors made loads of money with the strat.

I rate them around Baa2-3, but they pay like a Ba1-Ba2. It’s interesting.
https://en.m.wikipedia.org/wiki/Moo... Service's ratings,and bonds and bond ratings.