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Non-Tech : Income Investing
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To: bodiddley1953 who wrote (52016)10/3/2025 12:49:18 PM
From: Privately   of 52045
 
40 quarters of deferral

This kind of deferral clause is becoming more common in baby bonds, esp. among utilities (IMHO).

Companies want the interest deduction for debt payments, but they want the flexibility to stop paying when they get in deep trouble (like with a preferred stock) that doesn't trigger their debt covenants. So, they stick these types of deferrals in their debt documents.

Some big utilities have stopped paying for years, then paid all the deferred amount.

IIRC (I am on the road and working form memory) PCG stopped paying on lots of their issues for about 5 years starting in about 2017 (?) when they got hit with some big liabilities for killing hundreds of people with wildfires (and went through bankruptcy). They caught up all the payments in about 2022. That said, I know they did that on their preferreds, I think they did it with some debt, but I may be misremembering.
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