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02/24/2016

eBay Inc. Sells New Baby Bond Issue

Fellow Investor,

Online e-commerce platform company eBay (NASDAQ:EBAY) sold an investment grade, $750 million baby bond issue.

In recent years, it has been very unusual for companies such as eBay to sell this type of security, especially in very large offerings such as this one involving 30 million shares for a redemption price of $25 a share. But it is safe to assume that the 6% coupon on this investment-rated issue, coupled with its longer duration period compared to some other kinds of financing, offered the company the best overall terms.

This issue has a normal five-year optional redemption period that will allow the company to call in the bonds at the option of its management as early as March 1, 2021.

The newly issued baby bonds have a maturity date of February 1, 2056, and the shares will trade on the NYSE under the ticker EBAYL. Trading should commence in the next week.

eBay has no other preferred stock or baby bonds outstanding upon which to compare the fairness of the new issue, but you can compare the coupon with that of other investment grade baby bonds and preferred stocks on our website here.
 
British Airways parent IAG posts profit rise

Published: Feb 26, 2016 3:01 a.m. ET


By
ROBERT
WALL
LONDON--British Airways parent International Consolidated Airlines Group SA reported a 77% rise in full-year profit and should see further gains in 2016 on a sharp drop in fuel costs and improved operational performance.

Net income in the year in which IAG bought Irish carrier Aer Lingus rose to EUR1.54 billion ($1.7 billion) from EUR1 billion a year earlier, after sales advanced 13% to EUR22.9 billion.

The company's closely watched operating profit, excluding Aer Lingus, was EUR2.3 billion compared with guidance of EUR2.25 billion to EUR2.3 billion, the London-based airline said. Including the Irish carrier operating profit rose to EUR2.34 billion.


Fuel is among the airline industry's biggest costs, so the plunge in oil costs since mid-2014 has driven the industry to deliver record profits. IAG also benefited from deep restructuring measures at its Spanish unit Iberia and strong travel demand on key routes such as on trans-Atlantic flights.

"It's undoubtedly been a good year but it's also been challenging with extreme volatility in the currency and fuel markets," said Chief Executive Willie Walsh. The strong dollar has offset some of the benefit of lower fuel, he said.

Operating profit, which rose about EUR1 billion last year, should rise a similar amount in 2016, the airline said.

IAG proposed a 20 cent dividend per share for the full year.

The airline also announced that Javier Sánchez-Prieto would become chairman and CEO of Spanish budget unit Vueling, replacing Alex Cruz, who the company last year said would take over as chief of British Airways. Mr. Sánchez-Prieto is currently Iberia's chief financial officer.

Write to Robert Wall at robert.wall@wsj.com
 

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