Q: Hi Peter and Team,
Can you please comment on the credit worthiness of Nuvista? I was considering adding to my existing Nuvista bond with maturity in July 23, 2026 and coupon of 7.875%. I am wondering if I am missing something here?
Thanks!
Can you please comment on the credit worthiness of Nuvista? I was considering adding to my existing Nuvista bond with maturity in July 23, 2026 and coupon of 7.875%. I am wondering if I am missing something here?
Thanks!
5i Research Answer:
Other than the cyclical nature of the company, we think its credit quality is high. It is still 'smallish' at $2.6B market cap, but its balance sheet is very clean. Debt (net) is less than 0.5X annual cash flow. Asset coverage is good, and interest expense last year of $39M compares very well with operating cash flow of more than $700M. We think the bonds would be fine for income investors. Note at maturity there is a small loss as the bonds are trading slightly above par now.