sevpc, page-5

Thanks for your thoughts on SEVPC, Danube.

For the record, this is an unrated issue. However, keep in mind Warren Buffett's approach of effectively ignoring the ratings from the agencies: after all, he says that if their opinions on bonds were so important, he would give them his money and let them decide where to invest it.

SEVPC is one where we need to just look at the fundamentals to understand its true 'rating': the likelihood that SEV will default on these hybrids is virtually nil, given SEV's enormous cash reserves. SEV would have to blow virtually all of its cash on non-income-producing investments in order to run short of cash to pay dividends on SEVPC. Simply not going to happen.

Where did you derive the figure of $4 for every 1% margin?

If you're right and SEV does re-issue at a 4% margin, even that would be an attractive yield on what is presently a very low-risk hybrid.

I for one am selling down stocks to put cash into SEVPC as it approaches step-up.

DYOR.