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Last Weeks Bonds: Berkshire, Homebuilders & LNG

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February 04, 2013 – Comments (1)

It was fairly tame in corporate bonds last week.

I thought it was interesting that not one, not two, but three homebuilders were among the borrowers.  None of them were particularly big borrowers and all were listed among the high-yield crowd.  But, in these cases 'high-yield' was a coupon rate in the 5s.  Consider that four or five years ago, homebuilders would have had a hard time getting anyone to lend them money at any where close to that rate.

The other borrower that stood out was Cheniere Energy Partners' (CQP) subsidiary Sabine Pass Liquefaction.  That was one of the few bond issues I've seen that isn't refinancing, share buyback, acquisition or other financial engineering.  Sabine Pass will be doing some real engineering and construction.  A company raising capital for capital expenditures - imagine that.

Fool on!  Russ

1 Comments – Post Your Own

#1) On February 04, 2013 at 6:55 PM, Option1307 (29.91) wrote:

Thanks for the update. 

That is interesting about the homebuilders, they never would have gotten that rate a few years back. The fact that they are borrowing money is a great sign IMO though. That has been the sectors overall strategy as of late, buying up property on the cheap and I like it! 

Homebuilders have run too far too fast and probably are due for a good correction, but I don't plan on selling for another ~5 years. 

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