Summary
- Overview of Gladstone Capital Corporation's new baby bond - GLADL.
- Brief review of the company.
- Comparison with the other securities in the "Gladstone family."
- Comparison with the sector.
- Comparison with the other securities issued by BDCs.
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Introduction
Our goal is to present to you our IPO analysis for every new fixed-income security that enters the market and to find out if there is any trading potential. In this article, we want to shed light on the newest Baby Bond issued by Gladstone Capital Corporation (GLAD). Even though the product may not be of interest to us and our financial objectives, it definitely is worth taking a look at.
The New Issue
Before we submerge into our brief analysis, here is a link to the 497 Filing by Gladstone Capital Corporation - the prospectus.
Source: SEC.gov
For a total of 1.35M notes issued, the total gross proceeds to the company are $33.75M. You can find some relevant information about the new baby bond in the table below:
Source: Author's spreadsheet
Gladstone Capital Corporation's 5.375% Notes due 2024 (NASDAQ: GLADL) pay a fixed interest at a rate of 5.375%. The new issue has no Standard & Poor's rating, is callable as of 11/01/2021 and is maturing on 11/01/2024. GLADL is currently trading at a price of $25.40, which means it has a 4.28% Yield-to-Call and 4.90% Yield-to-Maturity. The interest paid by this baby bond is not eligible for the preferential 15% to 20% tax rate. This results in the "qualified equivalent" YTC and YTM sitting around 3.57% and 4.08%, respectively.
Here is the product's Yield-to-Call curve:
Source: Author's spreadsheet
