Havila on Reflection

In our rush to publish, we neglected to put one and one together. In hindsight, we should have noticed and highlighted the bond’s clear resemblance to a bank loan, but with more flexibility. As we noted, the Havila bond has a tenor of 6 years, is secured by a 1st mortgage and accrues interest at NIBOR + 450 bps. But unlike the banks, Havila got better terms. Specifically, the loan to value of 73% based upon cost, and the 20 year amortization likely exceed the terms banks would offer today. And lastly, given the fact it is new construction, the first installment is not due for 9 months. We see a trend here.

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