Navistar International (NAV) Keeps on Truckin': Convert and Company Summary

Navistar is not your father’s Triple-C (or, as one former colleague used to annoy me by saying, “Triple Hooks”) credit. Both the company’s straight bonds and convertibles imply a spread in the 450-500 basis point range, which once upon a time was the province of meaningfully stronger ratings.

No matter. Navistar is an improving credit and, even if the price implies a tighter spread than one might have associated with the ugly rating, the reality is that there could be room for even more tightening—especially as the company continues to work its way back from its near-death experience of two years ago.

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