So I bought a corporate (very) junk bond… roast me
I bought Telesat ($TSAT) October 2027 6.5% bonds. It is currently trading at a third of its face value. So I bought $3K worth of it for $1K out of pocket. If they were to not default on it (that’s a HUGE if considering its current market price), I would receive $65 per year per $1K tranche so $195 per year from my purchase. And receive $3,000 in October 2027. If they completely default tomorrow, I lose my $1,000. And there are many possible outcomes in between these 2 scenarios if they negotiate to only reimburse a portion of it at some point. This is obviously super duper high risk and definitely NOT financial advice. I would absolutely advise against it. Some institution or investor is selling its position at that price and most likely at a huge loss. And they believe its the best decision to make about this. I see it as a pure speculative gamble and in the worst case it would be a $1,000 lesson about corporate junk bonds. Anyone else trading junk bonds here?
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6 Comments
David
@kmarks · 2yr
I invest in bonds but have never ventured down the junk bond road. Is this your first time or are you a junk bond aficionado?
That cat eating salad
@perse · 2yr
I struggle to see how they could find the money to repay lol
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