Adding CIMN To Coverage
We’re adding another baby bond to coverage.
Chimera Investment Corporation (CIM) has a baby bond (CIMN).
Key metrics:
Coupon rate: 9%
Callable: 5/15/2026
Maturity: 5/15/2029
Current price: $24.50
Initial baby bond risk rating: 2.5
Yield to maturity: 9.95%
Yield to call: 10.66%
Expected first dividend: About $.525.
Note: Baby bonds are graded on a harsher scale for risk rating.
CIMN should be more stable than other types of investments with a similar risk rating.
Because baby bonds typically mature in about 5 years, a smaller price swing can have a significant impact on the yield to maturity.
That generally leads to less price volatility.
Note: The yield to maturity and yield to call are materially enhanced by the discount to face value. They also benefit from the dividends being paid out quarterly. Compounding leads quarterly payments to create a yield in excess of the coupon rate.
Disclosure: I am long CIM-B. We do not currently have any positions in any of the other CIM securities. I may place any trades (buying or selling) in any of the CIM securities at any point. I foreshadow potential trades explicitly for paid members.