GM Debt

Not that I am interested in buying but the NYSE listed GM debt has been at shockingly low prices.

I have written about this paper before. GM lists a lot of debt on the NYSE with a $25 par value. They look like preferred stocks but they do trade with accrued interest.

I found this table in a SmartMoney.com reprint of a Barron's article. The list only covers a few of the bonds, there are many other issues out there. The few I looked at on Yahoo Finance had no yields quoted.

It is kind of interesting to see these yields persist for what has been months now. GPM has been between $16 and $18 since early November.

I was in the middle of my very brief stint at Morgan Stanley when GPM was priced. Morgan participated in the deal and there was plenty available.

GPM is a convert and we had a guy there who used to trade converts for years and really knew the product. If I recall correctly (and I may be wrong) the selling concession was $0.65 on a $25 par value.

So naturally I questioned, won't the value drop right to $24.35 in a couple of weeks? The convert trader got very ticked at me. The bond did drop right away and stayed down for a few weeks before following the stock much higher. It actually got as high as $33.51 on January 8, 2004. That is a pretty wild ride.

Converts in general can be wild. I have written before about using funds for this part of the market. The brief history of GPM is a good example for why funds might be a good idea.