Gladstone Investment: New Baby Bond Begins Trading

June 2, 2023

NEWS

Going by Yahoo Finance, Gladstone Investment’s (GAIN) newest Baby Bond, with the ticker GAINL, began actively trading today – June 2, 2023.

As Promised

The BDC Reporter wrote about GAIN’s new unsecured debt issuance a few days ago in the BDC News Feed:

Out Of The Grey

There is always a gap between when a Baby Bond is issued and when market trading begins.

In this case, the ten days or so delay is pretty normal.

Current Price

GAINL is trading marginally below its $25.00 par price.

This provides any new buyer with an 8.1% yield.

According to the Bank America Corporate Bond Index for BBB-rated issues, the average yield is currently 5.7%.

More

For all the details about GAINL, see the excellent summary provided by Quantum Online.

VIEWS

Coming Back

We’re glad to see the BDC Fixed Income market regaining some importance.

We will be adding GAINL into the BDC Fixed Income Table – including much of the information listed above – over the weekend.

Added

This will bring the current Baby Bond universe to 22 securities – most of which are in that standard 5-year maturity format, with a 2-year pre-payment option for the issuer.

Refinancing Option

Those pre-payment dates have become academic of late as rates climbed but could come back into focus in the years ahead if the Fed is successful in tackling inflation and bringing down medium-term rates.

In this case, we could certainly see GAINL getting refinanced in the summer of 2025 at a substantially lower yield.

However, the bond markets have become much more treacherous of late where predictions are concerned.

It’s All Good

In any case, this new issue will strengthen GAIN’s balance sheet; offer management some optionality, and with new loans being booked at rates of 12% plus provide accretive earnings.

For debt investors, it’s an opportunity to earn a superior return through 2025 or 2028 from a long-established and well-run BDC.