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Monday Morning Kickoff

The S&P500 traded in a range of 2966 to 3155 last week before closing on Friday at 3098–a gain of around 2% on the week.

The 10 year treasury traded in the range of .66% to .76% last week and closed at .70%.

The Fed balance sheet FELL by $74 billion last week. This tumble came after rising just $4 billion last week. You can be certain that this will NOT continue longer term–with the Federal government spending like crazy and tax revenue drying up the Fed will be forced to continue to buy debt to fund the crazy spending.

The average $25 baby bond and preferred stock moved higher last week by almost 1%–up 20 cents/share. Investment grade issues moved up 1%, CEF preferreds moved lower by 10 cents. Lodging REIT preferreds moved lower by 2.5% as Ashford Hospitality suspended their preferred dividend which sent their preferred way down.

Last week we had 5 new income issue come to market.

It started off with Office Properties Income Trust (OPI) selling an investment grade debt issue with a coupon of 6.375%.

This issue is not yet being traded as near as we can tell. Begin debt there is no OTC grey market trading.

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Small Texas Banker, Triump Bancorp (TBK) sold a new issue of non cumulative preferred with a fixed rate coupon of 7.125%.

The issue is now trading on the OTC grey market under ticker TMPHL. The shares last traded at $24.45.

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BDC Saratoga Investment (SAR) issued a new baby bond with a fixed rate coupon of 7.25%. There is no OTC grey market trading in this issue.

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For the second time in about a month First Midwest Bancorp (FMBI) has come to market with a non cumulative preferred with a fixed rate coupon of 7%. The issue is trading under OTC ticker of FMDWl and last traded at $24.75.

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Lastly Iowa banker Heartland Financial (HTLF) has sold a new issue of fixed rate reset preferred. The issue priced at a fixed rate of 7% for about 5 years after which it will reset to the 5 year treasury plus a spread of 6.75%.

The OTC grey market ticker has not yet been announced.

Iowa Banker Heartland Financial to Sell Preferred Issue–UPDATE TICKER

THE OTC GREY MARKET TICKER IS HRLLL.

Heartland Financial (HTLF) is selling a new issue of Non-Cumulative preferred stock. HTLF is a holding company and owns banks in 11 different states.

Headquartered in little Dubuque, Iowa, the company has around $13 billion in assets.

The issue will be a fixed-rate reset preferred meaning it will have a fixed coupon for around 5 years and then will reset at the 5 year treasury plus a spread. It will then reset every 5 years there after while outstanding. Right now the 5 year treasury is around .30% – so the key to the issue is what the spread end up being (pricing not yet announced).

The issue will be non-cumulative, but qualified.

The issue will trade on NASDAQ under ticker HTLFP after a stint on the OTC grey market (ticker not yet announced).

The preliminary prospectus can be read here.

mcg was on this early with SteveA tagging on.

Ashford Hospitality Suspends Preferred Payments

Lodging REIT Ashford Hospitality (AHT) has finally suspended their preferred stock dividends. It was obvious that this was coming. Shares are tumbling on the official news (we all knew this was coming–only a fool would keep paying when they are fighting for survival).

The company joins Hersha Hospitality (HT) and Sotherly Hotels (SOHO) in having their preferred dividends suspended.

The preferreds are cumulative, meaning they will have to pay the suspended dividends before they ever pay another common dividend. This assumes that the company is solvent enough in the future to do so.

Ashford carries a ton of debt (over $4 billion)–but all debt is at the property level so I suspect we will see the REIT walk away from many properties instead of continuing to make debt payments–the company has over $200 million of cash on hand.

A chart of all lodging REIT preferred can be seen here.

The SEC announcement is here.

Triple Net Lease REIT VEREIT to Redeem More Preferred Shares

Many of us have held the preferred shares in triple net lease REIT VEREIT (VER) for quite some time. I have a few shares now, but just a taste.

The company has a 6.70% perpetual preferred (VER-F) outstanding which was a giant issue–originally around 43 million shares. Since the issue became redeemable in 2019 the company has called for redemption at least twice for 12 million shares–last I calculated there were still around 30 million shares outstanding.

Shares are now trading around $25.09. The shares pay a monthly 13.9 cent dividend. I expect shares will trade around the same level for the next year or so based upon the expectation that shares will all be called when the company is able to garner enough money to make it happen.

The company is selling more debt to redeem another chunk of the Series F preferred

For those that don’t own any of the VER-F issue it is a reasonable spot to garner 6.70% from a large REIT.

Potential investors should do their due diligence to understand the history behind VEREIT. Any one buying at this moment will have a portion of their shares called away in the next month (i.e. if you buy 100 shares today you may have around 20 shares called–just guessing).

Saratoga Investment Prices Baby Bonds

BDC Saratoga Investment (SAR) has priced their new issue of baby bonds.

The bonds will carry a fixed rate coupon of 7.25%.

The bonds will have an optional redemption period starting 6/24/2022 and will have a final maturity date of 6/30/2025

There will be no OTC grey market trading in this issue.

SAR has one other 6.25% baby bond outstanding which can be see here.

The pricing term sheet can be read here.

First Midwest Bancorp Prices Preferred-UPDATE TICKER

THE OTC GREY MARKET TICKER IS FMDWL

First Midwest Bancorp (FMBI) has priced their newest preferred stock issue.

Just like the issue sold last month the issue carries a coupon of 7%.

The issue is non investment grade, non cumulative , and qualified.

The OTC grey market ticker has not yet been announced.

The 7% issue they sold last month can be found here.

The pricing term sheet can be read here.

WTH First Midwest Bancorp to Sell Preferred

I say What the Hell!!

First Midwest Bancorp (FMBI) is selling a new issue of $25 preferred stock.

FMBI just sold a new issue 1 month ago–so this was a surprise. George M picked this one up early mid day. If you Prefer had it also.

The issue will be non-cumulative, qualified and rated BB- by S&P and Ba1 by Moodys.

The issue from last month carries a 7% coupon and is trading around $24.84 right now.

The preliminary prospectus for the new issue can be found here.

Saratoga Investment Corporation to Issue Baby Bonds

BDC Saratoga Investment Corporation (SAR) has announced they will be issuing a new baby bond.

This issue is rated BBB by Egan-Jones.

The issue will trade under permanent ticker SAC when it begins to trade on the NYSE. No OTC grey market trading will take place, although anxious investors may be able to call their broker with the CUSIP number (when known) and secure shares prior to exchange trading.

The new baby bond will mature in 2025 an will pay the typical quarterly interest payments. There will be a early redemption option for the company but the date has not yet been released.

SAR has 1 other baby bonds currently outstanding–it can be seen here.

The preliminary prospectus can be seen here for the new issue.

EarlyBird was early with this new issue.

Triumph Bancorp Prices New Preferred–UPDATE TICKER

THE OTC GREY MARKET TICKER IS TMPHL.

Triumph Bancorp (TBK) has priced their previously announced issue of perpetual preferred stock.

The issue priced at a fixed rate of 7.125%. The issue is non-cumulative and qualified. It is unrated by the major rating agencies. There will be a optional redemption available starting on 6/30/2025

The issue will trade on the OTC grey market, but the temporary ticker has NOT yet been announced.

Note that while we have had many smaller banks selling preferreds lately TBK may be about the smallest of the group with assets of just $5 billion. Maybe more due diligence is warranted before purchase.

The pricing term sheet can be read here.

Office Properties Income Trust Prices Investment Grade Debt

Giant office property REIT Office Properties Income Trust (OPI) has priced the previously announced senior note issue.

The issue carries a fixed rate of 6.375%. Being debt the interest payments are not qualified.

The issue matures on 6/23/2050 and has an optional redemption period starting 6/23/2025.

The issue carries low investment grade ratings from both S&P and Moodys.

Being a debt issue there will be no OTC grey market trading, but if one is anxious and wishes to buy before exchange trading begins a call to your broker with the CUSIP shown below may get you some shares early.

The pricing term sheet can be found here.