This bond is not for the risk averse income investor;
they call them junk bonds for a reason.
AK Steel, AKS, is in the steel business and they also work in the iron
ore and coal area. This post profiles a
high yield bond that you may want to consider.
AK Steel (AKS) Bond Cusip # 001546AL4
Technically, this bond is not a junk bond. Junk bonds are rated in the C
categories. Bonds rated AAA are the
safest, AA and A slightly less safe, then come those rated B. This bond is rated B- by S&P and B3 by Moody’s.
In my portfolio, I consider this bond a junk bond
because the company has experienced trouble from lower steel demand and high
costs. The interest coverage ratio is
-1.5 but that has improved from -4. AK
Steel’s 4th quarter update, according to Zacks, predicts a loss but
less of a loss than in the past.
Bond Specifics
AKS bond Cusip is 001546AL4. The bond will mature May 15, 2020. The bond coupon is 7.63%. It is trading around
$88.50 with a yield to maturity of 9.3%.
The bond is callable May 15, of this year and they can pay you back with
some stock so you may want to wait until after that call date to make your
decision. As of May 15, 2015, the bond
is callable at a price of $103.81.
My Take
I will add this bond to my portfolio but I will
watch it carefully. Bonds of this type
are for investors with some appetite for risk.
TheMoneyMadam
