TravelCenters of America LLC Sells a Baby Bond Issue – Update

Large travel center and convenience store operator TravelCenters of America LLC has sold a new baby bond issue.

The new issue has a 8% coupon and began to trade yesterday (Friday) and is trading around $24.95. The issue matures in 2030. We expect that this issue will trade no higher than $25.20 in the next 30 days as TravelCenters of American has 2 other baby bond issues now outstanding.  1 is a 8.25% issue and matures in 2028 while the other has a coupon of 8% and matures in 2029.

As we look over these issues we see no real advantage to buying the new issue as the 8.25% issue is trading with a 8.19% current yield although it matures in 2028 versus 2030 for the new issue.

TravelCenters (ticker:TA) is a company with about $6-8 billion in revenue (it varies based on fuel revenue which has been cheap lately) and reasonably profitable. The company leases most of the sites for their travel centers.

Details of the new issue are here.

UPDATE–we had overlooked the 1st call date on the earlier issues, so one may want to consider that the 8.25% issue has a first call date in 1/2016.  While we doubt it will be called there is always a chance.