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Month: February 2020

Priority Income Fund Prices New Term Preferred-UPDATE

UPDATE–OTC TICKER IS PRYFP. I don’t see it up yet at eTrade or Fico yet.

Untraded CEF Priority Income Fund has priced their most recent issue of term preferred stock. This issue will have a mandatory redemption in 2027.

The PRIF-F issue has been priced at 6.625%–better than I thought it would come at–but some readers had it on the nose.

The issue will trade on the OTC Grey market, but the ticker has not been announced. Actually their filing shows the ‘trade’ date for the new issue as 2/21/2020 (tomorrow) so maybe the OTC data will be delayed–we will update this page as soon as the info is announced.

The pricing term sheet can be read here.

Being a CEF Priority Income must have a asset coverage ratio of over 200%. The company estimated that after this offering was floated that they would be at 292%. This offering is larger than they anticipated–they estimated 1 million shares and this is 1.2 million plus over allotment possibilities of another 180,000 so coverage would be under 292%

The company has 5 other issues outstanding which can be seen here.

The Fear Trade is Alive and Well

While todays moves in stocks is NOT really too scary, the further plunge in the 10 and 30 year treasury bond yields has to give one a bit of a startle. In addition gold is spiking a bunch higher – up $29 last I looked.

The 10 year treasury yield fell as low as 1.44% before bouncing a bit to 1.47%–we are not quite at new record lows, but at this pace it could happen soon. The 30 year bond was at 1.91% last I looked which is a record low–can you feel all of your investment grade investments being ‘refinanced’ soon? These falling yields are in the face of reduced liquidity from the Fed–obviously the fear trade is overwhelming other factors.

This corona virus issue is started to take hold in a big way–I mean riots in the streets in Ukraine overnight shows the power (and maybe danger) of social media. Information–both factual and ‘fake’ moves very fast.

Then on top of the virus issue we see that the purchasing managers index at 49.4 showing a slight potential in the economy slowing. It was only earlier this week that the Philly Fed Manufacturing Index came out extremely hot—everyone will have to make their own determination as to what the hell is going on for sure.

1 thing I know–if I was holding shares in either Triton International (TRTN) or CAI International (CAI) I would be studying trade disruptions carefully. Both of these companies are huge providers of containers moving back and forth between Asia and the rest of the world. Thus far the common stock of the company’s have not really reacted to virus related trade disruptions–certainly their preferreds haven’t suffered–all 6 issues are trading really strong. Certainly if the disruptions are a short term item the companies will do just fine–but a larger spread–who knows–these companies carry a ton of debt and need a continuous flow of revenue to make their payments–no room for error.

Looking over $25/share preferreds and baby bonds today I see mostly green. Investment grade is up 2 cents, while overall shares are up 3 cents. There is a lot of complacency in the income arena so it seems.

This is one of those days to fasten your seat belt into the close of the markets in 2 hours–with the weekend ahead will folks unload their risk assets (stocks)?

141 Preferreds and Baby Bonds That are Potentially Dangerous to Your Wealth-Updated

UPDATE–I have tweaked the spreadsheet removing some issues with redemption dates in the future with incorrect calculations on the YTW.

Below is a spreadsheet that lists 141 preferreds and baby bonds that are either currently redeemable or will be within a couple of months.

I have arranged these with the worst yield to worst on the top–potentially the most dangerous of them all.

I am not saying any of these in particular will be called now–but a high percentage of them could be–do you hold them?

The last time I published a list of these I used just investment grade issues–this list covers any and all $25/share issues no matter the rating.

Note that the yield to worst calculation is off by a small amount (less than 1/2%) as it doesn’t figure accrued dividends and interest in the calc.

You need Google Sheets to open this spreadsheet.

Here is the spreadsheet.

A Little Market Excitement, But Little Damage

I look at the ticker after the market open today and see stocks off to another modest move higher–that’s all I need to see–I don’t watch minute by minute each day–maybe once per hour.

The next hour I look and the DJIA is off 373 points, so I did turn on the TV to see what was going on–as typically happens all I find is folks speculating on what happened–no one really knows. 1 explanation I heard was that traders all of a sudden realized stocks were out of sync with interest rates and gold prices–well no kidding–this has been the case for a very long time.

More interesting is that the 10 year treasury had dropped to 1.51%–off 6 basis points–we just keep getting closer and closer to all time lows in the 1.36% area–to me this is pretty scary–and I always take bond prices/yields more seriously than stock prices.

Oh well, checking our accounts I find no damage in the issues I own so I guess I am not too concerned about today’s action, but lower interest rates do concern me as I really wonder how long the economy can keep moving higher in the face of the Fed reducing liquidity and the unknown affects of the corona virus. Guess we will just have to keep watching.

I note today that the new Brookfield Renewable Partners 5.25% issue, which is trading under temporary ticker BKFRF is trading in the $25.70 area–fast out of the gate. I had an interest in this originally, but I am not paying this price–I am interested if it would tail off a bit in price.

Today we are seeing a little bounce back from yesterdays modest sell off in preferreds and baby bonds. Overall shares are up 5 cents with investment grade up 3 cents.

Adding Insult to Injury

While I shouldn’t have been surprised that Morgan Stanley is acquiring eTrade, it feels a bit like adding insult to injury.

All of us have had to fight to try to earn a decent return and after being with eTrade for around 25 years it now looks like I will have be concerned with how our accounts will be handled.

I have used eTrade as my ‘go to’ account given that our accounts at Fidelity are generally less versatile–i.e. not allowing us to buy certain securities.

Oh well–when the time comes I will just review all the commenters chat on which brokers they prefer. I guess Morgan Stanley will have to earn our business–too many changes–and in particular too many restrictions, and we will be gone.

Gladstone Land Reports Earnings for Q4 and 2019.

In case anyone has interest Gladstone Land (LAND) has reported earnings for the 4th quarter and year ending 12/31/2019.

The 10K can be read here.

I have an interest in this because of the term preferred shares currently outstanding (LANDP) which are trading at $25.71 right now. These shares have been callable since 2018 and will be redeemed 9/30/2021 (if not sooner).

Brookfield Renewable Partners LP Prices Preferred issue-Updated

Energy company Brookfield Renewable Partners LP (BEP) has priced the previously announced preferred unit offering.

The issue priced at 5.25%. It will become redeemable in 2025.

The issue is rated BBB- (low investment grade) by Standard and Poors.

The issue will trade immediately on the OTC Grey market under ticker BKFRF.

Update from earlier–BEP is a Bermuda company so there will be no Canadian withholding. But there will be a K-1 issued.

Preferreds and Baby Bonds are Red Everywhere

As Landlord Investor noted in the comment section preferreds and baby bonds were pretty red today.

I personally am not aware why we would be seeing red so widely–except for the fact that every damned issue is overvalued (when has that mattered?).

Today we saw investment grade issues off 14 cents, banks off 15 cents and overall we saw a fall of 13 cents. The big losers were shippers which were off 30 cents (not on the chart below).

Maybe we will see a buying opportunity?

Priority Income Fund to Offer New Term Preferred Offering

Priority Income Fund (non traded) has announced the launch of a new term preferred issue.

Priority Income Fund is a closed end fund which primarily invests in collateralized loan obligations (CLOs) and as such it should be considered somewhat higher risk than the run of the mill closed end fund. DO YOUR DUE DILIGENCE.

The issue has not yet been priced, but will trade under PRIF-F on the NYSE. I believe it will trade on the OTC Grey market to start, but the ticker is not yet known.

The announcement can be found here.

The updated registration statement for the issue can be read here.

The company already has 5 term preferred outstanding which can be seen here.

Disclosure–I own some of the PRIF-D 7% term preferred.