B. Riley Financial: This 6.875% Baby Bond Has Begun Trading On The Nasdaq

In this article, we want to present a new baby bond issued by B. Riley Financial (RILY). Our goal is purely to inform you about the product while refraining ourselves from an investment recommendation. Even though the product might not be of interest to us and our financial objectives, it definitely is worth taking a look at.

The New Issue

Before we get into our brief analysis, here is a link to the prospectus.

For a total of 3.48M notes issued, the total gross proceeds to the company are $87M. You can find some relevant information about the new baby bond in the table below:

Source: Author’s spreadsheet

B. Riley Financial 6.875% Senior Notes due 2023 (NASDAQ: RILYI) pay a fixed interest at a rate of 6.875%. The new issue has no Standard & Poor’s rating, but is expected to be rated “A-” by Egan-Jones Ratings Company. The newly issued baby bond is callable as of 09/30/2020 and is maturing on 09/30/2023. Currently, the new issue trades a little below its par value at a price of $24.94, which means it has an 8.44% Yield-to-Call and 7.21% Yield-to-Maturity. The interest paid by this baby bond is not eligible for the preferential 15% to 20% tax rate. This results in the “qualified equivalent” YTC and YTM sitting around 7.03% and 6.01%, respectively.

Here is the product’s Yield-to-Call curve:

Source: Author’s spreadsheet

The Company

As per the company’s website:

B. Riley Financial is a publicly traded, diversified financial services company which takes a collaborative approach to the capital raising and financial advisory needs of public and private companies and high net worth individuals.

Headquartered in Los Angeles with offices in major U.S. financial markets, the firm consists of over 900 employees whose cross-platform expertise is mobilized to provide a myriad

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