Corporate OTC (TransOcean) bonds and seniority

[kilk1]

I am currently looking at TransOcean bonds and they seem to be trading substantially below par, and I am wondering where I could find additional information on each bond - such as a bond prospectus?

I've got the ISIN, but I can't seem to find a breakdown on the bonds.

I am mainly interested in doing this because I want to figure out their seniority and IF TransOcean goes into bankruptcy that one can expect payment if the bonds are senior.

I attached a picture of the bonds that I can access from my trading platform.

https://imgur.com/a/hGQZImV

 

[tranquility999]

@kilk1 Did you manage to find the bond prospectus for CUSIP 893817AA4? For some reason, there's no Form 424B filing on EDGAR. It's probably because the bond was first offered in 1997 (source, screenshot)

Perhaps you could contact investor relations to get the prospectus.

EDIT

I've found the prospectus: https://www.sec.gov/Archives/edgar/data/314047/0000890566-97-000949-index.html

I did not find it at first because I mistakenly searched for Transocean Ltd. (NYSE: RIG) instead of the actual entity that issued the bond — Transocean Offshore Inc.

 

[kilk1]

@tranquility999

Form 424B

Yeah, but I am slightly confused.See the questions attached to each screenshot.

https://imgur.com/a/h1osalk

I mainly very interested in understanding the amount of redemption that occurs in each bond as they state in their 10-Q that some bonds are redeemed before specified dates etc.

They should be a redemption schedule somewhere so one can gauge at what dates specified bonds are redeemed?

Thank you for helping me.

Very few seem to be knowledgable in the bond space.

 

[tranquility999]

@kilk1

Why do not all bonds have an outstanding rating from Moody's & SP?

Most likely because Transocean did not bother to pay any credit rating agency to rate some of its bonds. Search for "unrated debt", "unrated bond", "non-rated bond" to learn more.

Why are these empty?

I don't know why it is empty.

You should have provided the CUSIP! It is difficult to find bonds without their CUSIP or ISIN. Please do not omit crucial information. Anyway, from the shape of the price chart, I found that this is CUSIP G90073AG5 "TRANSOCEAN INC NEW" 11.500% due 2027-01-30 (screenshot).

What does put & redemption provisions mean - in their 10-Q they state that they might redeem certain bonds ahead of their redemption date. Is it this they're referring to?

Again, where is the CUSIP?! I found that this is CUSIP 893830BQ1 TRANSOCEAN INC 11.500% due 2027-01-30 (screenshot).

Yes, this is a callable bond.

Note that this particular bond is a SEC Rule 144A security, which means that you need to be a Qualified Institutional Buyer (QIB) to buy it.

They should be a redemption schedule somewhere so one can gauge at what dates specified bonds are redeemed?

Here's all the information I could gather on these 11.5% bonds due 2027:

• Form 8-K: https://www.sec.gov/Archives/edgar/data/1451505/000145150520000082/0001451505-20-000082-index.htm (The part you're interested in is "Article 3" about "Redemption" in EX-4.1).
• Transocean Ltd. Announces Exchange Offers and Consent Solicitations for certain Existing Notes
• Transocean Ltd. Announces Early Results, Extension of Early Tender Time, Amendment to Exchange Offers and Termination of Consent Solicitations
• Transocean Ltd. Announces Successful Court Ruling, Extension of Exchange Offers and Current Exchange Results
• Transocean Ltd. Announces Final Results of Exchange Offers

If you are really interested in getting information, I would strongly recommend that you contact Transocean's investor relations department to get answers to your questions.

Side notes

It seems that you are interested in bond trading. Not to discourage you, but there are several problems which you have already observed through this Reddit thread:

• Information is scarce, hard to obtain, and hard to understand.
  • Institutional bond traders have a Bloomberg terminal (cost: $20k+/year). If not mistaken, it is essential for bond trading.
  • Other than the FINRA Bond Center website, there are no free and useful bond information websites.
  • Not all bonds are rated by a credit rating agency. Will you be able to rate bonds on your own? Institutions have the resources to hire bond analysts to do this.
• Bonds are difficult to buy — The 2027 11.5% bond is an example of this. It is available only to QIBs, which means that as an individual investor, you will need to be millionaire to be allowed to buy it. Almost all bonds trade over-the-counter (OTC) instead of on an exchange. The minimum transaction sizes are large, the commissions are large, the bid-ask spreads are large, and the market is illiquid.

Very few seem to be knowledgable in the bond space.

There are lots of knowledgeable people in the bond space. They are mostly not small retail traders, however. It is probably because of the reasons I mentioned above. Bond trading is difficult for small retail investors.

If you are a small retail investor, you can still buy bonds. Ask your stock broker about their bond offerings; they may not offer all bonds, but they may have enough investment-grade bonds for you to get started. You could also look into exchange-traded debt. Remember to read a bond textbook (e.g. the various Fabozzi textbooks or equivalent) to educate yourself.

Note that there is r/FixedIncome on Reddit.

 

[fltom]

@tranquility999 Callable Bond

A callable bond (also called redeemable bond) is a type of bond (debt security) that allows the issuer of the bond to retain the privilege of redeeming the bond at some point before the bond reaches its date of maturity. In other words, on the call date(s), the issuer has the right, but not the obligation, to buy back the bonds from the bond holders at a defined call price. Technically speaking, the bonds are not really bought and held by the issuer but are instead cancelled immediately.