More ‘Usury’

Tom Bozzo

Tries to one-up Brad DeLong (and by extension Dr. Black), with this item from the middle of last month:

Kansas City Southern upped its new five-year debt offering to $190 million from an initially announced $175 million, and said it will pay 16.5 percent in yield on notes held to maturity.

The company plans to use the money along with some other borrowing to buy up $200 million in 7.5 percent senior notes due next March.

The new notes will be due in 2013. KCS said they will bear an annual interest rate of 13 percent but be sold at a discount to their par value…

KCS is the smallest of the Class I (large by revenue) railroads. My recollection is that KCS’s debt ratings are (or at least were) on the low end of investment grade. It may be a matter of debate as to whether it’s worse in the present climate to be a big newspaper or a biggish railroad, but KCS may have a stronger claim to providing a useful service to its customers…