Cliffs Natural Resources 4.875% of April 1, 2021

Here is a good tip for you. Cliffs Natural Resources is a good investment for anyone that has a 7.5 year time horizon. This bond is also good for someone that is investing in their own self-directed IRA. In my research, I came across a bond that is giving 5.654% until April 1, 2021. The CUSIP No. is 18683KAD3, It gives interest semiannually on Oct.1 and April 1. The bond is not callable until January 1, 2021. It has a Moody’s Rating of Baa3 and an S&P Rating of BBB-.

The bond recently sold at a discount, $952.91 giving $48.75 per year. That means that If you bought the bonds on Oct. 1, 2013 and kept it until maturity, you would get $365.63 plus $47.09 at maturity. That means in total you would make $412.72 on a $952.91 investment over 7.5 years. No, it is not the kind of return that you see in the movies but it beats the 2% returns that banks are giving and it does not come with the high risk that stock speculation offers you.

Steelmaking Megatrends 

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This company mines coal and Iron ore for the steel industry. Cliffs’ strategy is to build scale in the steelmaking raw material sector. There strategy is based on their belief in certain megatrends within the commodity industry. Demand is supported by continued global urbanization, specifically in emerging economies such as China, India and Brazil. Urbanization will increase the steel intensity rates, driven by housing and infrastructure. Rising disposable incomes also encourage construction related to leisure activities and personal services. This development is anticipated to increase demand and is not expected to be matched by corresponding increases in supply. Quality from mature producing regions is deteriorating, while logistical networks for new mining districts are becoming more complex and costly to build.

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