Take Profits on Talen Energy

Of the 15 bonds that I have recommended since the outbreak of COVID-19 and held for more than a month, we either are currently sitting on a capital gain or have sold and locked in that profit.

All of the bonds have also paid generous amounts of interest income.

And now it’s time to bank another profit.

I recommend you sell your Talen Energy (CUSIP 69352jak3) December 15, 2036, 6% coupon bonds. These are the former PPL Energy Supply bonds.

PPL Energy Supply was spun off from PPL Corp. to Talen Energy Supply.

The bonds are listed in the speculative portion of the Oxford Bond Advantage portfolio as Talen Energy.

For my taste, the 2036 maturity date, which is still 15 years away, is much too far out in the future.

Too much can happen between now and then to allow me to be comfortable owning these bonds for that long.

Predicting what is going to happen next week is tough.

Predicting what is going to be happening in 2036 is impossible.

Our PPL Energy Supply bonds were purchased at $51 back in September 2018, and they are now trading for $56.

That means we can cash out now with a nice profit while having received several years of that juicy income stream.

Action to Take: Sell your Talen Energy (CUSIP 69352jak3) December 15, 2036, 6% bonds for $57 ($570 per bond) or higher.

If you can’t get your price, cancel your order and keep trying over the next few days or weeks.

Note that the Oxford Bond Advantage portfolio also contains the Talen Energy (CUSIP 69352jan7) December 15, 2021, 4.6% coupon bonds. I am not recommending selling those given how close they are to maturing.

Delta Made a Principal Payment on Our EETC Bonds

If you own the Delta Air Lines Inc. EETC (CUSIP 247367ax3) July 2, 2024, 6.718% bonds, you should have received a sizable principal repayment in your brokerage account in early January.

Unlike our usual corporate bonds that repay the principal amount in full only at maturity, the principal on these EETC bonds is repaid in installments over the life of the bonds.

Based on the repayment schedule detailed in the prospectus that accompanied the issuance of the Delta EETCs, the payment that you should have just received was a big one.

In early January, you should have received cash equal to roughly half of your initial investment in the bonds.

With that repayment, the value of the Delta EETC bonds in your portfolio will have decreased and the cash in your account will have increased by the exact same amount.

You will continue to earn interest at a rate of 6.718% on the remaining balance of your bonds.

The next principal paydown will come on July 2, 2022.

Because a chunk of the principal has been paid back already, I’m moving the bonds to a “Hold.”

Mercer Bonds Called

Last week, I recommended not tendering your Mercer International (CUSIP 588056au5) February 1, 2024, 6.5% coupon bonds.

That decision has been taken out of our hands, as all of the bonds will be called on February 1 at $1,016.25, plus accrued interest.

You do not have to take any action. The bonds will automatically be redeemed, and you will be paid.

This will be another profitable trade, as we bought the bonds two years ago at $1,005. So we’ll make an $11.25 profit per bond, plus we collected the 6.5% coupon for two years. A very solid return on our money.

Congrats on the two wins.

Hoping your longs go up and your shorts go down,

Marc

If you have any questions, email editor@oxfordbondadvantage.com, or call any of the brokers listed below for help…

• Ron Kramer: 917.887.2386 or 877.70.bonds (877.702.6637)
• Ron McCoy: 407.614.2006 or 877.79.mccoy (877.796.2269)
• George Walters: 321.293.0284 or 800.329.1984