This time I decided to go for a little bit different type of investment – fixed income corporate bonds.
Investment: Auga group 5y bond with 6% paid annual interest. I bought 1 bond for 1.000€ paying an additional 2€ fee. This will bring us 51€ (60€ × 0,85) annual post-tax interest income for the next 5 years.
Security: Bond is secured with agroculture land plot pledge of the same value. This brings lots of comfort in L/T. It’s quite unusual for bond to have collateral.
Company: Engaged in eco food production and is very into corporate sustainability. This is what I like and think that company should be ok in 5y and should be able to repay/refinance the issued bonds of 20 mEUR. Company generated 14 mEUR EBITDA during last 9mo + 2018Q4. At the moment company has 47 mEUR financial debts so Debt/EBITDA stands at 3,4x, which looks a bit high, but still more or less ok. Y2018 EBITDA was just 3,3mEUR due to bad harvest leverage was nearly 14x. So the activity is very volatile. Due to that company issues these bonds and will cover existing financial debts. This will give them flexibility for the next 5y and company can focus and invest in growth. Another to my view very important ratio is equity which stands at 42% which looks more or less ok. So this brings me comfort to lend 1kEUR to this company for 6% for the next 5y. Investment is a bit risky, but the return is decent.
This investment increases our forward passive income to 578€, and we are close to 3% mark from estimated 20kEUR expenses needed for financial independence.