Small Texas Banker Triumph Bancorp (TBK) is selling a new fixed rate non cumulative preferred
The issue will be non-cumulative, qualified and optionally redeemable starting 6/30/2025.
The company also released a presentation which can be read here.
Month: June 2020
REIT Office Properties Income Trust to Offer Senior Notes
Office REIT Office Properties Income Trust will be offering some baby bonds with a maturity in 2050.
The ticker will be OPINL and the baby bonds will trade on NASDAQ. The issue will not trade on the OTC grey market, but you might be able to secure notes before exchange trading by calling your broker.
I did a quick look at the offering and don’t find anything unusual–quarterly interest payments, optionally redeemable starting in 2025 and a maturity date in 2050.
The preliminary prospectus can be read here.
Monday Morning Kickoff
The S&P500 traded in a range of 2984 to 3233 last week before closing at 3041 which is a loss of about 5% on the week.
The 10 year treasury traded in a range of .65% to .92% before closing the week at .70%
The Fed balance sheet grew by only $4 billion last week–certainly the smallest rise in months.
The average $25/share baby bond and preferred stock fell by over 2% last week. Bank issues fell by 3%, utility issues by just over 2%, lodging REIT preferreds by 6%. This was the 1st losing week since back in early April.
Last week we had 3 new income issues announced.
We started off the week with self storage giant Public Storage (PSA) announcing a new perpetual. The new 4.625% coupon issue is trading under temporary ticker PUBXL now last traded at $24.50. They have called the 5.375% PSA-V issue with the proceeds of the new offering.
Associated Banc-corp (ASB) announced a new non-cumulative preferred issue with a 5.625% coupon. The issue is trading under OTC grey market ticker ABBCL and last traded at $24.67.
Lastly annuity provider American Equity Investment (AEL) announced a new non cumulative perpetual preferred that is a fixed-rate reset issue (reset every 5 years). The issue is trading under temporary ticker AEIHL and last traded at $24.56.
Wee!! Down We Go!! Bargains Appearing
Not a surprise to most of us here to see the DJIA off about 2,000 points this week–easy come, easy go.
We are back to a realization that the economy pretty much sucks–of course it does. The question is always what it will do in a few quarters?
Companies stepping forward and talking about the future–in a realistic way, are bringing share prices back to earth.
The airlines as well as the cruise lines have traded at silly prices–no matter the bounce back in traffic–a doubling from near nothing is still pretty much nothing. Delta (DAL) today said they were looking to renegotiate credit terms with dire implications if they were unable to do so.
Royal Caribbean Cruises (RCL) traded to $75 just a few days ago–up from $22 a month ago!! RCL has no business–today, next month and maybe a few months from now. RCL is carrying a $12 billion market cap–with no business—WTH.
These companies are again need to go to the debt market and their credit ratings are being lowered–i.e. they are screwed if this recovery doesn’t come off perfect.
In the markets we care about–preferreds and baby bonds we are seeing more red than we have for months. The air is being let out of many of the junkier issues. You can see the losers here.
All the crap issues such as the Ashford Hospitality preferred are off significantly. The AHT preferreds are off 25% TODAY. Almost all the lodging REIT preferreds are getting the wood put to them. This is true of the mREIT preferreds as well.
I am not buying–just watching the ride down. Believe it or not there are only about 20 gainers out of near 500 preferred shares today. Even the utility preferreds and baby bonds are off 1-3%.
Will there be even better bargains ahead for income investors? Everyone has an opinion–none of us know for sure.
American Equity Investment Life Holding Prices Preferred
Annuity provider American Equity Investment Life (AEL) has priced their new fixed-rate reset perpetual preferred with a fairly tasty initial coupon of 6.625%.
More importantly the issue, which will have the 1st coupon reset on 9/1/2025 has a ‘spread’ of the reset at 6.297%. The spread will be added to the 5 year treasury every 5 years to ‘reset’ the coupon.
This issue is non-cumulative, qualified, and NOT investment grade.
The issue will trade immediately on the OTC grey market under ticker AEIHL
A Potential 6.875% (annualized) on this Baby Bond
Earlier today I had seen a press release from CenturyLink which carried within it an announcement of a ‘call’ on some baby bonds. Gary had also mentioned this in the ‘reader initiated alert‘ section of the website.
The press release is here and the paragraph on the call is at the bottom.
The baby bonds they are calling are the Qwest 6.875% Notes (CTV). The company is calling just $200 million of the $500 million originally issued. The call happens on 6/29/2020 which is the ex-dividend date and should be made at $25.42 (+/-).
I jumped in right away for a part position to minimally capture the interest payment (42.97 cents) that will be made on 7/1/2020. I paid $25.07 and shares closed the day at $25.14.
So after this call $300 million in baby bonds remain outstanding (12 million shares).
Historically–and never a promise made–this should put a floor under the price right in the $25 area. The floor is maintained by the speculation that the balance of the issue will be called soon. Maybe it is called soon and maybe it isn’t, but the point is that the call risk will be minimal–if any.
This issue remains split investment grade–BBB- from S&P and Ba2 from Moodys.
American Equity Investment Life Holding Company Announces New Preferred
American Equity Investment Life Holding Company (AEL) has announced the issuance of a new fixed-rate reset non-cumulative preferred stock. A fixed-rate reset issue will be fixed for about 5 years and then be reset every 5 years to a new coupon determined by the ‘spread’ which is added to the 5 year treasury.
The issue will be non investment grade—BB by S&P.
The company currently has a 5.95% issue already outstanding and it is a fixed-rate reset preferred and has traded weakly – now at $22.27. This issue has a weak reset rate of 4.322% which when added to the 5 year treasury (around .47%) is around 4.80%–this new issue will need to be better.
The key to the attractiveness is what the ‘spread’ will be when the issue reaches the reset period.
You can find the information on the currently outstanding issue here.
The preliminary prospectus for the new issue can be found here.
mcg was right on it-as always.
Associated Banc-Corp Prices New Preferred–UPDATE–OTC Ticker
Finally the OTC ticker is announced and is ABBCL.
The previously announced new preferred from Associated Banc-Corp (ASB) has been priced.
The issue is priced at 5.625%. Investors should compare the coupon and terms of this new issue against pricing and terms of the 3 currently outstanding preferreds from ASB-they can be see here.
The issue is split investment grade, non-cumulative and qualified.
The issue will trade on the OTC grey market–but the ticker has not been announced as of 7:45 am (central).
Associated Banc-Corp Joining the Preferred Issuance Party
Midwest banker Associated Banc-Corp (ABS) is joing the party to issue new preferred stock.
The company will be issuing ASB-F which will be a non-cumulative, qualified, split investment grade issue (BB from S&P and Baa3 from Moodys).
The company has 3 outstanding preferred issues which can be seen here. The ASB-C 6.125% issue is redeemable starting on 6/15/2020, but the company has not announced an intention to redeem the issue
The preliminary prospectus can be seen here.
mcg was on top of this new issue.
Public Storage Prices Preferred with Rock Bottom Coupon
Storage REIT Public Storage (PSA) has priced their new preferred.
The pricing is fixed at 4.625% for 20 million shares–with another 3 million for over allotments. This is now the lowest coupon the company has outstanding–they had sold a 4.70% issue in November, 2019 and that issue is trading at $25.55.
The new issue is cumulative, non-qualified and investment grade.
Proceeds of the new issue will likely be used to redeem the PSA-V 5.375% issue.
All of the companies outstanding preferreds can be seen here.