Once in a great while you find or learn something that is so unbelievably good, that you have to hear or read it over and over again, often from different sources or perspectives, before the truth of it actually starts to sink in and really make sense. Perhaps it’s that initial bewilderment that has served to curb much of any demand from the fixed income markets for this otherwise “golden” opportunity. Fortunately, this is great news for those that eventually arrive at a deeper understanding of why these Gran Colombia Gold bonds are so darn good… and it is why these bonds are well deserving of overweighting in our high performing FX2 fixed income portfolios.
Beyond Belief… this may be the most fascinating debt instrument we have ever reviewed.
Rising with the price of gold, the cash flow and yield of Gran Colombia Gold’s senior secured “Gold Notes” appears to be headed straight into the land of unbelief. Perhaps what we see here is either wrong… or something in this picture seems to have quietly escaped the attention or the view of most other investors in the high yield bond market. Granted, this is not a straightforward and easily understood issue because of the quarterly interest boost linked to its amortized quarterly redemption of principle when the price of gold is higher 1250 per ounce. However, it is precisely this “hard to be understood” feature that is driving its current push into the land of dreams.
This week, Durig Capital reviews the largest underground gold and silver producer in Colombia. Gran Colombia Gold has staged an amazing transformation from just a short three years ago, when Durig Capital began to carefully follow this issuer. After completing a well-timed and skillfully crafted restructure of its balance sheet early in 2018, the company has consistently continued to smash its production targets, and has once again impressed us with its most recent results for the fourth quarter and full-year 2018.