Brookfield Renewable Partners LP (BEP) has announced a new offering of preferred units (they are units if the issuer is a partnership). As a partnership this offering will likely generate a K-1 at tax time.
BEP is a $3 billion dollar renewable energy partnership that I am not familiar with other than they are another unit of the giant asset manager Brookfield Asset Management.
Being a Canadian partnership there may be withholding on your distributions.
From time to time it happens that new issues are announced–or at least SEC documents are filed, indicating a new issue of preferred stock is ‘coming’, but then we never see the issue.
Additionally CEF Priority Income Fund (no traded public shares) has refiled their registration statement for a new issue of term preferred stock (this would be PFIA-F). In this case Priority Income is following their normal mode of operating–they keep an updated registration on file–and when they believe the time is right they sell the issue. I am not holding my breath for this issue as they have 5 term preferreds already outstanding–from an investor perspective no reason to wait on a new issue.
Texas bank Cullen Frost (CFR) slipped in a full call of their 5.375% perpetual preferred late Friday (2/14).
Once again folks were caught as the shares traded last at $26.16—with this price the 3/15/2020 redemption means a loss of around 83 cents/share for holders.
The S&P500 opened the week at 3318 and closed the week 2% higher (of course) at 3380. The 10 year treasury started off at 1.57% and ended the week at 1.59%, although it was as high as 1.64% during the week.
The Fed Balance Sheet grew by $16 billion last week as the overall assets carried by the Fed remains flat over the last 8-9 weeks. The Fed had previously announced a reduced $5 billion weekly repo facility from mid January to mid February–they have now announced another $5 billion reduction starting in the 1st week of March. You can see the repo plans here.
The fact of the matter is that with the flattish balance sheet the last 2 months something has to give–we are now in very dangerous territory as the government debt continues to grow and the Fed will have to monetize the debt–with falling repo targets they will have to ramp up purchases of bonds and mortgage securities.
We are in significant danger right now of an INTEREST RATE SPIKE if the Fed doesn’t step in. We’ll just have to see what shakes out.
Last week we had a bunch of new income issues announced.
We started the week off with the pricing of a new perpetual preferred from Brookfield Property Partners (BPY). The issue is trading under OTC ticker BOPTP and last priced at $25.37.
mREIT New Residential Investment (NRZ) sold a new fixed-to-floating perpetual preferred. The issue is trading under OTC temporary ticker NRESP and last traded at $24.81
Telecom giant AT&T (T) announced a new perpetual preferred with a coupon of 4.75%. The issue is trading under OTC ticker ATTXL and last traded at $25.20
mREIT Dynex Capital (DX) sold a new fixed-to-floating rate preferred. The issue is trading under OTC ticker DXPBN and last traded at $24.95.
Lastly Medalist Diversified REIT (MDRR) sold a new preferred with a mandatory redemption in 2025. This issue came to market at $23 but has a liquidation preference of $25. The issue is trading on the NASDAQ and last traded at $20.56.
The average $25 preferred and baby bond moved by just 1 cent–lower last week. Banking too a nickel hit while the shipping issues (not in the chart) bounded back by 16 cents.
Below is the economic calendar for the week. All in all there isn’t likely much here that will move markets. The FOMC minutes are released on Wednesday, leading indicators on Thursday and PMI (purchasing managers index). While I am starting to believe more and more that the corona virus WILL start affecting economic numbers it may be too soon to see those showing up in any releases.
Arbor Realty Trust (ABR) which has 3 high yield perpetual preferreds outstanding announced earnings on 2/14/2020.
With earnings that generally are pretty good, one has to wonder how long 3 issues of perpetual preferreds can remain outstanding–in particular one with a 8.50% coupon (ABR-C). Shares are all trading very strong with the ABR-C issue trading at $26.52–and it just went ex-dividend for 53 cents.
We have posted a new version of the sortable spreadsheet which we initally released on 12/16/2019.
The new version has new issues added and redeemable issues removed–no other changes.
If you copied the original version you may want to delete the old version and replace it with the new version to have new issues (through 2/10/20) added and redeemed issues removed.
mREIT Dynex Capital (DX) announced a surprise partial call of their 7.625% DX-B shares of preferred stock late today.
DX which just sold a new issue of 6.90% perpetual preferred (4 million shares plus 600,000 for over allotment) had announced with the sale of this new issue they were calling for redemption their 8.50% DX-A issue for 3/14/20. There was no mention of a partial redemption of the 7.625% DX-B issue.
Lo and Behold late today commenter Ralph happened upon a press release stating the intention of the company to redeem 1.7 million shares of the DX-B issue on 3/16/2020.
The DX-B issue closed Fridays trading at $25.55. This partial call should now peg the remaining shares closer to $25 plus accrued dividends for the future.
Markets are all kind of quiet–both stocks and bonds, as we look into a 3 day weekend (at least as far as stock and bond trading are concerned).
Stocks are moving around 1/10% right now and the 10 year treasury is off 3 basis points at 1.59%. It will be interesting to see the close today–seems likely that stocks may slide as folks bail out before any surprise news potentially comes out over the long weekend.
$25/share preferreds and baby bonds are moving little today (on average). All sectors are up a penny or down a penny.
We are still awaiting pricing on the new Orchid Island Capital (ORC) perpetual preferred. This happens on occasion–an issue is announced and then pricing is delayed or in some instances even cancelled. The company has not filed a cancellation notice so I assume the issue is still on.
This weekend I will setting up a new ‘discussion‘ area for “Broker/Brokerage” talk. We always have folks discussing the rules and regulations of the various brokers–what they will let us buy etc. I will be getting this set up in the right hand menu area. This will allow for keeping some of this info segregated and will hopefully be a reference area. Thanks to a number of folks for encouraging this area.
Additionally I started a new ‘study‘ on new issues. I began with the Southern Company 4.95% Notes (SOJD) on 1/6/2020. I have seen questions on the value of buying new issues and then flipping them during the 1st month (or sometime shortly after issuance). I am looking at the ‘opening trade’, 1st day close, and close after 30 days.
If you would have bought on the open on the issue above and sold on trading day 30 you would have banked a capital gain of 47 cents/share.
I will see if I can get the spreadsheet to be understandable and then post it. I update it each day with new issues etc.
UPDATE–the OTC Grey Market temporary ticker is DXPBN. Thanks to Bob-in-Thailand for being on this.
Dynex Capital (DX) has priced their previously announced fixed-to-floating rate preferred.
The company is selling 4 million shares plus 600,000 for over allotment with an initial fixed rate of 6.90%. The coupon will float starting 4/15/2025 at the rate of 3 Month Libor plus 5.461%.
The issue is unrated and will be cumulative but not qualified.
The permanent ticker will be DX-C when it begins to trade on the permanent exchange.
Issue will trade OTC immediately, but the temporary ticker has not been announced as of this minute-we will post it when it is announced.
The company will redeem their DX-A 8.50% perpetual preferred with the proceeds of this new offering.
