Buy Goldman Sachs Group Inc. bonds, according to a recommendation by corporate bond research firm Gimme Credit.
“Bondholders are feeling somewhat more comfortable about Goldman’s prospects than its shareholders, considering the helping hand the firm has received to stabilize its funding position since Lehman (Brothers Holdings Inc.) failed in September,” Kathleen Shanley, senior analyst, wrote in the recommendation.
“We’d buy at current levels, since our view is that anticipation of a weak fourth quarter is priced in.”
Goldman Sachs will release its fourth quarter and annual financial results Dec. 16, the company said in a news release today.
Goldman Sachs has $4 billion face value in the notes, which carry a 6.515% coupon and are due April 1, 2018. They traded Wednesday at an 8.6% yield. Moody's rates them Aa3 and Standard & Poor's AA-.
“A buyer of credit protection would have to pay $328,000 a year to buy $10 million worth of protection on Goldman Sachs bonds,” Ms. Shanley said, expressing “the credit default swap level as another way of looking at how fixed income investors views the credit risk of Goldman Sachs.”
