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Markets Quiet Awaiting News–Always Waiting on Something

Equity futures are quiet as we await the most recent economic news. We have the second look at 4th quarter GDP and initial jobless claims at 7:30 a.m. (central)–then at 9 a.m. we have pending home sales and consumer sentiment. News that previously was kind of unimportant is now parsed 16 different ways. Yesterday equities went parabolic the last 40 minutes of the day–the conspiracy folks out there immediately suggested a leak of today’s data–well we will see what the numbers turn out to be in about 90 minutes.

The 10 year treasury is now at 4.22%–pretty quiet and still in the range (4.15% to 4.35%) where it has been for the last 2 weeks. We could see this range broken tomorrow, when equity markets are closed, when the personal consumption expenditures (PCE) are released.

Tomorrow equity markets are closed for Good Friday so we can all enjoy a 3 day weekend, although treasury markets are open until 1 p.m. (central) so we could see some interest rate movements.

Finally last night we got pricing on the new Eagle Point Income (EIC) term preferred stock issue. The issue priced at 8% for 1.22 million shares plus 183,000 over allotment shares. The press release is here. I already own the 7.75% term preferred (EICB) issue which is trading at $25.10 – we will see if it is worth the trouble of swapping issue for issue.

Odds and Ends

We are still awaiting pricing on the new Eagle Point Income (EIC) term preferred–it is unusual for the issue to not be priced as of yet.

The new 6.75% baby bond from Affiliated Managers (AMG) is now trading under ticker MGRE and is now at $25.58. The new 7.25% perpetual note issue from Brookfield BRP is now trading under ticker BEPJ and closed today at $24.98.

Headlines of Interest

Below are press releases from companies with preferred stock and/or baby bonds outstanding–or just news of general interest.

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TEN Ltd. Reports Record Profits for Year-End and Fourth Quarter 2023 Results and Dividend of $0.60 per Common Share

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CTO Realty Growth Announces First Quarter 2024 Earnings Release and Conference Call Information

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OFG Bancorp to Report 1Q24 Results and Hold Call Thursday, April 18, 2024

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U.S. Bancorp Announces First Quarter Earnings Conference Call Details

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Arch Capital Group Ltd. to Report 2024 First Quarter Results on April 29


Greenidge Generation Announces Fourth Quarter Results Will Meet or Exceed Preliminary Results

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Capital Southwest Receives Affirmed Investment Grade Rating from Fitch Ratings

Not Compelled to ‘Buy’

When I have cash in my accounts I almost always feel compelled to buy something–preferred stock or baby bonds, but now for the first time in years I have jettisoned that ‘need’. When my money market is paying me over 5% and CDs are 5.3% for 3 month, non callable issues why should I feel I just have to buy something paying me 6-8% and adding substantial risk to the portfolio. Part of this is driven by my belief that interest rates, on the long end, are not going to fall much–supply of new treasury debt will at some point in time overwhelm demand–then we will have real interest rate problems.

Some will recall that I mused a few months ago on movements in the long end of interest rates–the 10 year would drift lower into the fall and at that time rates would move higher–now I am worried that markets may have the ‘ah ha’ moment sooner than the fall. An obvious item which can change the scenario is that the Fed discontinue QT (quantitative tightening) which would mean the Fed would not runoff the balance sheet–the balance sheet would remain at $7.5 trillion or even move higher if they were forced into quantitative easing (QE). The other item which could move the needle is that the congress act to reduce spending–but we all know that is highly unlikely (not inviting political discussions here). The bottom line is that I am putting a premium on safety–if we get a ‘ah ha’ moment investors could get whacked.

So with plenty of cash in our accounts I have added CDs again–but leaving some cash in case I find something to buy – a term preferred or maybe a short dated baby bond–but at this point in time I won’t blast all the cash into preferreds or baby bonds–nor am I selling anything. All this is subject to change of course. We’ll see.

Headlines of Interest

Below are press releases from companies with preferred stock and/or baby bonds outstanding–or just news of general interest.

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Logan Ridge Finance Corporation Announces Fourth Quarter and Full Year 2023 Financial Results

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Logan Ridge Finance Corporation Schedules Fourth Quarter and Full Year 2023 Earnings Release and Conference Call

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LifeMD Declares Quarterly Dividend on Series A Cumulative Perpetual Preferred Stock

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Healthcare Trust Announces Preferred Stock Dividends

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Eagle Point Income Company Inc. Announces Offering of Preferred Stock

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Hancock Whitney Corporation to announce first quarter 2024 financial results and hos

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W. R. Berkley Corporation to Announce First Quarter 2024 Earnings on April 23, 2024

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Wells Fargo Announces 2025 Earnings Release Date Information

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Pebblebrook Hotel Trust Provides Operating Update

Eagle Point Income Announces New Term Preferred

CLO owner Eagle Point Income (EIC) has announced the offering of a new issue of term preferred stock.

The issue will be a monthly payer and will have a maturity in 2029.

EIC already has 2 issues of term preferred outstanding which can be seen here.

The preliminary prospectus is here.

Thanks to Rand who mentioned this on Reader Alerts.

Interest Rates on Hold Awaiting More Inflation News

Lately it seems that we are always awaiting ‘news’—in particular inflation news. This week we have the personal consumption expenditures (PCE) data on Friday and just watching interest rates yesterday and this morning it appears that it is highly likely that rates will drift in the 4.15% to 4.30% area. Watching paint dry is kind of boring, but it is always fine with me as long as I am making money–really it is simply what we do.

Today we have durable goods orders being released at 7:30 a.m (central). It is unlikely that anything in this economic release will move markets. At 8 a.m. we have the Case Shiller housing price index–it will show prices continue to rise–no surprise to me. The supposed high mortgage interest rates are more and more being accepted by folks as the new norm–the ‘haves’ don’t worry as many, many are paying cash for new houses–the ‘have nots’ are simply screwed. Yes they may qualify for government backed loans–i.e. FHA, but my experience says that the more houses sold with FHA, VA and other government backed programs that occur the more likely we will see a housing event of some sort when/if a recession comes.

As everyone knows business development company Trinity Capital (TRIN) sold a new baby bond yesterday with a coupon of 7.875%–right in the area of other BDC baby bonds sold recently. The company may use some of the proceeds to redeem some of their 7% baby bond due 2025 (TRINL). I own some of the TRINL issue and thus lost a bit yesterday as the shares moved lower by 22 cents–no big deal. I own TRINL for the 7% coupon and for the stability of the share price being that short maturity issues will trade at $25 plus accrued and this has not changed. If they redeem some of the issue it will be on a pro rata basis that is ok–I can buy more shares if I desire.

Well equity prices are higher this morning–we’ll see if this holds up–no reason to think markets will tumble–all news is good news.

Trinity Capital Prices Baby Bonds

BDC Trinity Capital (TRIN) has priced their new issue of notes due 2029.

The issue prices at 7.875% for 4 million shares plus 600,000 more available for overallotment.

The notes are rated BBB by Egan-Jones and BBBL by Morningstar (not sure how Morningstar rates debt so will have to do some digging).

The company ‘use of proceeds statement is as follows–

The Issuer expects to use the net proceeds from this offering to pay down a portion of its existing indebtedness under the KeyBank Credit Agreement and, depending on the remaining amount of net proceeds after such use, to redeem a portion of its outstanding 2025 Notes.

The pricing term sheet is here.

Headlines of Interest

Below are press releases from companies with preferred stock and/or baby bonds outstanding–or just news of general interest.

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Freddie Mac Issues Monthly Volume Summary for February 2024

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Enstar Subsidiary Assigned ‘A’ Financial Strength Rating by S&P Global

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ARMOUR Residential REIT, Inc. Announces Guidance for April 2024 Dividend Rate Per Common Share

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Brookfield Renewable Announces $150 Million Green Perpetual Subordinated Note Issuance and Intention to Redeem Series 15 Preferred Units

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Teekay Group Publishes 2023 Sustainability Report and Announces Availability of Annual Reports on Form 20-F for the Year Ended December 31, 2023

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UMH PROPERTIES, INC. WILL HOST FIRST QUARTER 2024 FINANCIAL RESULTS WEBCAST AND CONFERENCE CALL

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Ellington Financial Inc. Completes Proprietary Reverse Mortgage Loan Securitization

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AXIS Capital Announces Publication of the Company’s 2023 Loss Development Triangles

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PartnerRe Ltd. Reports Full Year 2023 Results

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Terreno Realty Corporation Announces Offering of 5,000,000 Shares of Common Stock

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Terreno Realty Corporation Acquires Property in Brooklyn, NY for $12.0 Million

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Best’s Special Report: Underwriting Losses Persist in U.S. Property/Casualty Industry, Total $21.2 Billion in 2023