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Newtek Business Services: To Issue New Baby Bond

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Newtek Business Services (NEWT) has issued a draft prospectus relating to the prospective issuance of a new Baby Bond.

The draft prospectus is attached.

The amount, pricing and term are not known.

However, the new unsecured debt will be publicly placed, as opposed to privately.

One of the potential uses of the proceeds is to repay the $57.5mn outstanding under NEWT’s existing Baby Bond with the ticker NEWTI.

NEWTI nominally matures in 2023 but can be redeemed at any time.

A second existing Baby Bond with the ticker NEWTL does not allow for issuer redemption before 8/1/2021 and matures in 2024.


We will be reviewing and writing about NEWT’s new debt when all the details get filled in.

However, readers who are invested in NEWTI or are thinking of doing so, might want to know about the LIKELY redemption of the Baby Bond.

The BDC Fixed Income Table has been updated accordingly.

We expect the new issue will yield somewhere between 5.0%-5.5%, even though NEWT has been paying much more of late in private placement.

However, we cannot determine if NEWT is seeking this new financing to reduce its interest cost by paying off NEWTI early or has some unexpected liquidity need.

If that is the case, NEWTI may not get refinanced at this stage and the yield on the new debt may be higher than we anticipated.

More to follow.

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