The Fossil Group, Inc. 7% Senior Notes (ticker: FOSLL) represent a fixed-income security that pays quarterly dividends. This instrument is particularly appealing to income-focused investors due to its high yield. As of 2024, the security offers a dividend yield fluctuating between 12.8% and over 17% in certain periods, depending on its trading price during each quarter. The consistent quarterly payment is $0.4375 per note
The Fossil Group 7% Senior Notes due 2026 (ticker: FOSLL) have experienced a significant decline since their issuance. Initially offered at a par value of $25 in November 2021, the notes are currently trading at approximately $13.45. This represents a 46.2% decline in value since inception
This high yield is a reflection of the underlying risk associated with Fossil Group, a company operating in a challenging retail environment. Over the past year, the security's trading price has varied significantly, affecting the effective yield. For instance, in November 2024, the notes traded around $13.61, representing a significant discount from their par value, which also enhances the yield for new investors
The notes' performance indicates robust income potential but also highlights volatility tied to market sentiment and Fossil Group's financial stability. This makes it suitable for risk-tolerant investors seeking higher income streams, particularly in a low-interest-rate environment. However, potential investors should consider the issuer's creditworthiness and the note's callable features as part of their risk assessment.
These senior notes were designed to provide a 7% annual coupon yield, making quarterly interest payments of $0.4375. Despite the attractive yield, their decline reflects broader challenges for Fossil Group and investor skepticism regarding the company’s ability to manage its obligations effectively, given its speculative credit rating of "B" by S&P.
If an investor had purchased $1,000 worth of these notes at issuance, the investment would now be worth approximately $575.77, demonstrating the combined impact of market risk and potential credit concerns.
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