Oil Prices Set to Spike on Saudi Attacks

As those folks that have been following the news this weekend already know a drone attack on Saudi oil fields and facilities has forced Saudi Aramco to shut down over 5 million barrels of oil production–about 1/2 their production. We can expect to see a spike in crude prices Sunday when global trading restarts.

On a global basis there are plenty of crude reserves to serve the needs of everyone, but as we all know there will be knee jerk reaction of some sort–will it be $1 or $10 dollars (or more) is the question. Additionally whether this is a short term issue or will it take some time to bring production back on line.

Lots of Red in Income Markets

A confluence of ex-dividend dates with relatively rapidly rising interest rates is forcing many, many preferreds and baby bonds lower by 25 or 50 cents this week–some much more.

With the 10 year treasury trading around 1.89% after being at 1.43% just 10 days ago you might expect some give back on the easy capital gains we have all garnered recently. Personally our accounts are off about $1,000 bucks this week–no big deal–mostly because we have such a high cash position.

I am personally watching certain quality issues–for instance the AllianzGI Convertible and Income Fund 5.625% preferred (NCV-A) is trading down 60-65 cents in the last 2 days (about 1/2 is due to ex dividend) bringing the current yield to 5.41%. I have more than a full position, but could add a little more.

Some of the other big losers simply are some quality issues that were getting ahead of themselves such as Digital Realty 6.35% preferred (DLR-I) which had traded up to $27 a couple of days ago and now with the combination of ex-dividend and rising interest rates have knocked it down to $25.93 It should be noted this issue has early redemption available in 11 months and many times when an issue is trading with such a large premium to a $25 redemption once it gets closer to the potential redemption is will fall on ex-dividend date and never recover.

The preferreds list showing losses can be seen here–maybe it is a shopping list?

Rexford Industrial Realty to Sell New Preferred

REIT Rexford Industrial Realty (NASDAQ:REXR) will be selling a new preferred stock issue. The issue will trade under the permanent ticker of REXR-C when it begins to trade on the NYSE—after a short stint on the OTC Grey market. The temporary OTC ticker has not yet been announced.

The issue is the typical REIT issue with cumulative dividends, but being non qualified.

The company currently has 2 preferred issues outstanding, both with 5.875% coupons which can be seen here.

The preliminary prospectus can be read here.

mcg had this posted in Reader Initiated Alerts a couple hours ago.

Fifth Third Bancorp to Sell Perpetual Preferred

Regional Banker Fifth Third Bancorp (NASDAQ:FITB) will be offering a new preferred stock.

The issue will have typical banking company terms–qualified, but non cumulative and will be a fixed rate issue.

The company currently has 2 issues outstanding, 1 of which is the old MB Financial issue which they acquired recently. These issues can be seen here.

The preliminary prospectus can be see here

mcg had this new issue announced 1st on the reader alert page.

AG Mortgage Investment Trust Prices Preferred

mREIT AG Mortgage Investment Trust (NYSE:MITT) has priced their new fixed-to-floating rate preferred with an initial coupon of 8%.

There was some thought that they might be able to call one of the old issues, which bear coupons of 8% and 8.25%, but it would appear to be unlikely with this issuance at 8%.

The issue will float starting in 2024 at 3 month Libor plus a spread of 6.476%.

NOTE–the OTC Grey Market ticker has not been posted as of 7 a.m. CDT.

The pricing term sheet can be seen here.

Fred was on top of this pricing last night with a posting under the mREIT AG Mortgage Investment Trust to Sell Fixed-to-floating Preferred.

mREIT AG Mortgage Investment Trust to Sell Fixed-to-Floating Preferred

Mortgage REIT AG Mortgage (NYSE:MITT) will be selling an issue of fixed-to-floating rate preferred.

The issue will trade under the permanent ticker of MITT-C when it begins to trade on the big board–no OTC symbol has yet been released

The company has 2 other preferred issues outstanding which can be seen here. MITT has not announced any redemption in the preliminary prospectus with proceeds from the new offering.

The preliminary prospectus can be seen here.

Saul Centers Prices New Preferred

REIT Saul Centers (NYSE:BFS) has priced their new preferred stock with a fixed coupon of 6.00%–slightly better than I thought it might come at.

All of the terms are normal REIT preferred terms.

The company plans to call their 6.875% BFS-C issue with the proceeds of this offering.

The pricing term sheet can be see here.

mcg had this pricing last night in under the New Preferred OTC Grey Market Tickers note I had posted

New Preferred OTC Grey Market Tickers

Interestingly the new OTC temp symbols of the Bank of America preferred and the Saul Centers preferred have been posted.

Bank of America will be BFALL

Saul Centers will be SAUXP

Unfortunately there have been no pricing terms posted yet for either issue. I have noticed lately that the SEC filings get later and later–for whatever reason.

Thanks to Number 6 for being on the lookout for these temp symbols.

Bank of America Selling New Preferred

Bank of America (NYSE:BAC) is coming to market with another preferred offering. Of course being a bank the dividends are non cumulative, but qualified.

The company had just offered a new preferred in June @ 5.375% (BAC-M) which as can be seen here has traded very strongly. Guess that tells us this new issue will have a lower coupon–for sure.

The issue will be low investment grade.

The new issue will have a permanent ticker of BAC-N when it hits the big board. The OTC Grey market ticker is not yet known.

The preliminary prospectus can be seen here.

Again mcg was right on this new issue 2 hours ago in Reader Alerts.

Saul Centers to Issue Preferred for a “Refi”

REIT Saul Centers (NYSE:BFS) has announced a new issuance of preferred shares with the intention to redeem the 6.875% BFS-C issue.

The issue will be a typical REIT issue being cumulative and non qualified. The permanent ticker will be BFS-E when it trades on the big board. The OTC ticker has not been announced yet.

While likely to be unrated BFS is a quality company and the coupon is likely to be somewhat meager.

The preliminary prospectus can be found here.

mcg was right on this one in the Reader Initiated Alerts section.

South Jersey Industries Prices Baby Bonds

South Jersey Industries (NYSE:SJI) has priced their new issue of baby bonds with a fixed rate coupon of 5.625%.

The issue is a rather large one with 8 million shares (bonds) offered. The ticker is not yet known for this one so readers will need to watch their broker for trading–likely in a week +/- it should begin to trade. There is no OTC Grey Market trading of this issue.

Note that this issue is junk rated. Additionally SJI may defer interest payments for up to 40 quarters without a default.

Potential investors should weigh the true importance of the terms of the issue before making buy decisions. Terms of the offering need to be considered in light of competing issues. I personally may buy this issue because of the lack of reasonable competing issues with a decent coupon–I would prefer investment grade with no deferral periods allowed–but it is what it is and this may be a decent opportunity for many.

The pricing term sheet can be found here.

South Jersey Industries to Sell Long Dated Baby Bonds

Regulated natural gas utility South Jersey Industries (NYSE:SJI) has announced the offering of some Jr Subordinated Notes (baby bonds).

The issue will have a maturity date way out in 2079 with an early redemption period starting in 2024. The issue will have the ability to have interest payments deferred for up to 40 consecutive quarters without a default occurring. While we don’t like these kind of stipulations they are not unusual in utility issues.

Being baby bonds the interest payments are not qualified distributions. I am not seeing a rating at this moment on the new offering, but Moodys has some secured debt at A1–the new offering is NOT secured debt.

This issue will not trade on the OTC grey market prior to big board trading, but occasionally with a call to your broker you may be able to pick up shares prior to official trading.

The preliminary prospectus can be read here.

A shout out to Eugene and mcg who noted this one within 2 minutes of when I saw the announcement. mcg has posited an estimated coupon of 5.675-5.75%ish.