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JABIL CIRCUIT INC SENIOR NOTES 7.75% COUPON

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High Yield Corporate Bond Review: JABIL CIRCUIT INC SENIOR  NOTES 7.75% COUPON

Jabil (JBL) provides electronic manufacturing services. Jabil designs and manufactures electronic circuit boards for major OEM’s in a diverse group including Automotive, Computing and Storage, Consumer Products, Medical, Networking, Peripherals and Telecommunication.

At Durig Capital, we have developed a process for our clients to review, select, purchase and monitor Corporate Bonds.  Enclosed is our review along with supporting documents showing why we believe it makes sense with our corporate bond clients’ portfolios. We reviewed 10,000 separate Corporate bond listings to find what, we believe, currently is the best corporate bond for Investors. The following includes our selection criteria.

Step 1 – Yield Curve at 4-7 Years Out.

We went out on the yield curve just enough to receive higher returns in yield but not far enough that if inflation starts to increase, due to our country’s largest deficit spending, it’s creating small but real probability of increased inflation which could lead to a loss of principle loss. To protect our client in this worst case scenario we would just plan to hold to maturity.

Step 2 – We like companies that are profitable.

Jabil had a pro-foma profit of $0.32 and well above analyst estimates of $0.29 for the last quarter.

Step 3 – We like companies with low debt to cash ratio.

Jabil’s current debt is $1.18 billion and cash equivalents was $852 million. If Jabil applied it’s current cash to it’s current debt, it would have only $328 million in debt with core earnings of $68 million last quarter.

Step 4 – We like high yields.

Jabil bonds currently have a 6.727 % Yield. With the corresponding Treasury yielding 2.73 % gives Jabil an attractive 3.997 % spread over Treasuries.

Step 5 – We currently like shorter maturities.

Jabil bonds mature in 7/15/2016, or in just over 6 years.

Summary

A good 6.5% yield for a 5+ year bond that even thought it had a lower rating, coverage above close to almost cash and it’s short term profit execution was very nice. Delivering a good profit soon after a tremendous shock to our economy helps prove to me the value of it’s business model. I beleive with the low debt level and good profitability it well situated for an upgraded bond rating. You can find other High Yield Corporate Bonds listed on our web site by clicking here.

Coupon   7.50%

Ratings Ba1/ BB+

Maturity 07/15/2016

Price 105.250

Yield to Maturity 6.727%

Yield to Call 6.727%

Cusip  466313AE3

General Information

Sector OTHER INDUSTRIALS
TRACE Eligibility YES
Listed NO
Exchange OTC
Minimum
Investment Quantity
2
Incremental
Investment Qty
1
Marginable YES
Original Size 312,000,000
Delivery BOOK ENTRY
Day Count Basis 30/360

Issue Information

Convertible NO
Payment Delay 0 DAY DELAY
Pay Frequency SEMI-ANNUALLY
Issue Date 07/31/2009
Dated Date 08/11/2009
First Coupon Date 01/15/2010
Last Coupon Date 01/15/2016
Workout Date 03/10/2010
First Settlement Date 08/11/2009
Federally Taxable YES
Bonds In Default NO
Issuer Events? YES


One thought on “JABIL CIRCUIT INC SENIOR NOTES 7.75% COUPON

  1. Leann Musselwhite

    Really great article – I was heading for a similar article which I will probably still take a shot at, but from a slightly different angle. Thanks for sharing this with your readers…Obviously a lot of others appreciate it too!

Comments are closed.

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Updates to our Distressed Debt 1 Hedge Fund



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