Postby AGoodman » Thu May 07, 2020 1:55 pm
Yes, if it weren't for the interest. I suspect the 8% interest compensates for the delayed repayment but this depends on the risk profile of the company. It might even garner a small premium over par if the capital is considered safe (e.g. if the borrower was a property investment company in a secure position). Given the current environment, I suspect par might be seen as a fair value. If the company is struggling, there could be a discount.
As maths says, you have to assume that there is a willing buyer but I think you can take into account that this hypothetical buyer would take the illiquidity into account when buying the debt; however three years is not necessarily very long if the debt is a safe investment.