Short Duration Debt - The Way We Choose To Invest In Ready Capital

2025-02-26 15:18:12 ET

Summary

• Ready Capital's short-duration exchange-traded senior notes, RCC and RCB, offer attractive yields of 8.6% and 9.6%, respectively, for the risk they carry.
• The company has faced challenges post-COVID, with a total return close to zero over the past decade and a recent dividend cut of 17%.
• Ready Capital's capital structure shows a relatively high debt-to-equity ratio, with recent debt increases and significant interest expenses impacting financial stability. Monitoring of performance is required.
• Given the company's ongoing financial distress, short-term debt investments in RCC and RCB are to be considered for cautious exposure to Ready Capital.

Co-authored by Relative Value.

Overview

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