Here are seven deep discounted corporate bonds that I have in my IRA that will be maturing in 2011. I make money on these bonds no matter what happens outside of bankruptcy. But for people who want to make money by purchasing short term junk bonds while understanding that they are taking a little higher risk vs. FDIC, may want to look at the bonds below. The prices are from Dec. 2, 2010.
1) HILTON HOTELS CORP NT 8.250% 02/15/2011 (Not Rated) Priced at $997.82. It will give you $19.13 per bond in 75 Days.
2) ALLIED CAPITAL CORPORATION NEW SR NT 6.62500% 07/15/2011 (Rated BA1/BBB) Priced at $102.125. It will give you $38.71 per bond in 225 Days.
3) AMERICAN GENERAL FINANCE CORPORATION 5.25000% 04/15/2011 (Rated B3/B) Priced at $987.71. It will give you $31.56 per bond in 134 days.
1) HILTON HOTELS CORP NT 8.250% 02/15/2011 (Not Rated) Priced at $997.82. It will give you $19.13 per bond in 75 Days.
2) ALLIED CAPITAL CORPORATION NEW SR NT 6.62500% 07/15/2011 (Rated BA1/BBB) Priced at $102.125. It will give you $38.71 per bond in 225 Days.
3) AMERICAN GENERAL FINANCE CORPORATION 5.25000% 04/15/2011 (Rated B3/B) Priced at $987.71. It will give you $31.56 per bond in 134 days.
4) AMERICAN GENERAL FINANCE CORPORATION 5.50000% 04/15/2011 (Rated B3/B) Priced at $988.59. It will give you $31.60 per bond in 134 days.
5) AMERICAN GENERAL FINANCE CORPORATION 5.35000% 09/15/2011 (Rated B3/B) Priced at $987.66. It will give you $54.41 per bond in 287 days.
6) AMERICAN GENERAL FINANCE CORPORATION 8.10000% 09/15/2011 (Rated B3/B) Price $992.84. It will give you $63.69 per bond in 287 days.
7) RIVER ROCK ENTERTAINMENT AUTHORITY 9.75000% 11/01/2011 (Rated B2/B+) Price $905.00. It will give you $175.67 per bond in 302 days.
If you want to be the safest that you can be in the junk bond market, I would stay with Standard and Poor’s BBB to B- rated bonds, going out no more than 365 days. The higher the rating and shorter the maturity, the safer you are but the less return you make. This is why RIVER ROCK ENTERTAINMENT AUTHORITY returns more than ALLIED CAPITAL CORPORATION.
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You may not have the money to take advantage of these bonds. But I am sure you remember me talking about investment clubs. You can create an investment club along with your friends and relatives for the purchase of short term bonds like the ones above. Later you can loan money to the members of the club using these bonds as collateral (margin accounts). Once you do that then you have created your own non-bank bank for use by your club membership.
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2 comments:
Darnell,
Have you been able to find any research on the River Rock Bonds? The risk is they cannot get the bonds refinanced, but that seems slim to me given their strong cash flow which has not slipped at all over the last two years.
I hold the bonds as well, but am thinking of adding some more.
I am sure that River Rock Cannot get financing for a reason. That reason is usually no one wants to take the risk.
The rating agencies have been doing their jobs over the past 10 years. I am sure that the risk is more than just refinancing.
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