Originally Posted by
Balance
One of the best risk-adjusted fixed interest investments in the market has to be the SML 2024 bonds imo.
I have quietly picked up a parcel in recent times and believe that those who bought the bonds at 3.83% pa yield and sold out at up to 18% pa have not thought through the strategic nature of SML to Bright Foods and ATM.
Both would be very happy to take out the company completely at around current valuations (sp $1.43 vs NTA of $3.21) which could yet happen if SML makes a heavily discounted rights issue, underwritten by the principal shareholders.
Do the bondholders have any idea how long (& geopolitically difficult) it takes for a China company to build up a primary sector player like SML? Have a look at how long it took Singapore's Olam International to build up its multi-billion food empire?
There will be a time to play SML shares - the major risk now being the NZX re-indexing in December.