As noted by J very early this morning Citigroup (C) has called their 6.875% fixed to floating preferred (C-K) issue for redemption on 11/15/2023 which is the 1st date it became redeemable.
Additionally Ontrak (OTRK) has received a delisting notice for their 9.5% perpetual preferred (OTRKP) for trading under $1/share–it is now at 36 cents.
I have not held a preferred thru a call date…is it correct to assume I would receive the dividend that would normally be paid in November?…If so I would lose 31cents in value and gain 43cents in a dividend between now and 11/15?
Correct.
Yes on a $25 par preferred
Drat. Bit of a surprise to me; I expected C-K to get called at some point, but thought that they’d do C-J first.
(I added to my C-K position last week.)
O.–I suspect J will be next. They can only call on a dividend payment and the next for the J issue is 12/30/2023.
And yet C-N just keeps on ticking. A bunny or a bomb? :))
You will win powerball before they call CprN…
It would destroy their earnings if they did that.
Justin, please elaborate.
I recall seeing posts to that effect, but I was unable to find them, nor did I find any comments directly by Citi management (I searched transcripts of recent conference calls). Your statement mirrors what I remember from those posts, but I could use a refresher – if possible, a link to where Citi stated this.
Thanks
Mbg, its been mentioned in several posts frequently, but referring you to them is impossible, ha. So here you go…Much easier this way.
The company has said in the past that it would be uneconomic. Due to a quirk in accounting rules, the securities are carried on Citigroup’s balance sheet for about $1.5 billion, not their face value of about $2.2 billion. A redemption would cost $2.2 billion at the face value of $25. This would result in an accounting loss of more than $700 million.
“If we were to redeem this, we would take a large hit to our P&L. And that’s just the way that the bookkeeping has worked on that security,” said Citigroup chief financial officer John Gerspach in 2017 on a conference call. “The decision to redeem that security is largely an economic one. Is it worth taking a large loss to redeem?”
https://www.barrons.com/articles/citi-preferred-stock-dividend-7a338456
Grid, much appreciated, sir!