Buffets Misses Coupon Payments: Bonds Fall To New Lows

[hatrack]

Source: Bloomberg

Jan. 3 (Bloomberg) -- Buffets Inc., the largest operator of buffet-style restaurants in the U.S., failed to make a coupon payment on $293 million of debt, sending the bond prices plunging to a record low.

Buffets, a closely held company based in Eagan, Minnesota, didn't pay interest yesterday on its 12.5 percent notes maturing in 2014, according to Matthew Lee, a customer service representative at U.S. Bank National Association in St. Paul, Minnesota, the trustee for the debt.

The missed payment sparked concerns that corporate defaults are starting to escalate as the worst home sales market since 1981 slows the economy. Tousa Inc., the Florida homebuilder that lost 99 percent of its market value in the past year, also missed interest obligations on $485 million in debt, the company said in a regulatory filing yesterday.

``Default rates are going to start to increase'' this year, said Katalin Kutasi, a principal and the investment manager for distressed debt at hedge fund Kellner DiLeo & Co. in New York, which manages $300 million. ``A lot of them are going to be consumer-sensitive companies.''

EDIT




Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=amLmTGN6Tcnk&refer=home

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According to the article, they're now paying 48.7% on the bonds they missed the payment on. Ouch.

[HeraldSquare212]

1. I guess their eyes were bigger than their wallet

[ret5hd]

2. It was these guys fault:

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=2575171

[truthisfreedom]

3. Wow, what a penalty. What interest rate do they pay when they miss the NEXT payment?

This isn't approaching mafia interest rates. This IS mafia interest rates.

[Catshrink]

6. Don't forget the $35 late payment fee!

Oh, and don't forget to jack their interest rate.

[Crabby Appleton]

9. Won't make any difference, bankruptcy court is the next stop. nt

[cstanleytech]

14. Yeah but want to bet that most of the

executives if not all of them will still be sitting in their mansions laughing their butts off while people lose their homes and jobs?
Makes me really :mad: to think about how most of them probably wont pay for their sheer greed.

[JBoy]

10. Table for two, please

[jpak]

4. Whew!! - I thought it was that Warren guy

:rofl:

[Catshrink]

7. That was my first thought also.

[Parche]

5. Food For Thought

Lettuce see when they go bankrupt,because they have Bean there before, if you Carrot all............:hi:

[SoCalDem]

8. No more Romaine from now on..only iceberg

:rofl:

PEOPLE WHO ARE HAVING TROUBLE MAKING HOUSE PAYMENTS & BUYING GAS, DO NOT EAT OUT AS OFTEN AS BEFORE

[aquart]

11. Oh, that great Bush economy.

[MidwestTransplant]

12. If their coupon was 12.5%, they were not too credit worthy to begin with.

[hatrack]

13. Oh, yeah, they were junk from the get-go

And they're not alone, according to the article - all about all kinds of high-yield fender-benders potentially on the way.

[TechBear_Seattle]

15. A 12.5% bond?! That is high

Generally, corporate bonds that are insured or are issued by companies with good credit ratings are around 7% - 9%. Municipal bonds, issued by local and state governments and special tax districts, are typically between 6% and 7%; they are safer investments and so they do not need to pay a higher interest to attract investors.

Twelve and a half percent, though... wow. They must have been low rated to start with, to have to pay that much.

[jberryhill]

16. I can't stand missing my buffet coupon....

...especially when it's a 2 for 1 coupon.