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CPTAG - Capitala Finance's Bonds Will Outperform Its Stock
Logan Ridge Finance Corporation 5.75% Convertible Notes Due 2022
CPTA's stock depreciation and discount to NAV reflect deterioration in the company's fundamentals. A substantial percentage of the portfolio is at risk of write-offs and defaults.
With ample liquidity, cash, and deleveraging plans, CPTA's prospects of bankruptcy are slim, opening a bullish opportunity on the company's baby bonds, which is oversold due to current market disruptions.
In addition to the 13% portfolio exposure to defaulting loans, 28% of portfolio investments are in companies that received additional cash during the pandemic.