Dive in Walter's PIK leaves investors hurting

摘要

Investors in the new US$350m PIK bond from walter energy are nursing big losses after the risky security dropped six points immediately after pricing. The bond plummeted on Wednesday to 94 in cash terms and stayed down around the same level in the aftermarket on Thursday, leading bankers to say the trade had been mispriced. The six-year PIK toggle, part of the coal company's plan to push out its debt maturities, priced at par with an 11% cash coupon and 12% PIK via left lead Morgan Stanley.