Monday Morning Kickoff

Once again the S&P500 moved higher last week as the index traded in a range of 3414 to 3509 closing the week at 3508–a gain on the week of around 3%.

The 10 year treasury moved in a range of .62% to .75% closing the week at .73%.

The Federal Reserve balance sheet fell by $20 billion — after rising $53 billion the week before–it has become obvious that the current buying by the Fed of government debt, mortgages and other assets will be pretty lumpy week to week. The globe is awash in money and even a meager coupon on U.S. debt is attractive compared to nothing, or less than nothing in some countries.

The average $25/share preferred stock and baby bond followed along with the common stocks and saw an increase on the week of 10 cents a share. CEF preferreds were up 5 cents/share, banks up 9 cents and investment grade 17 cents.

Last week we only had 1 new income issue sold and that was a baby bond from REIT Sachem Capital (SACH). While company has issued a press release with pricing shown as 7.75% the SEC paperwork has not been filed–I expect it will be filed this morning. Sachem has a couple other baby bonds outstanding.

Weekend Odds and Ends

These are just a few items of interest (to some) of odds and ends I have come across this week or that folks have discussed in varying comments.

This morning 2whiteroses posted a notice of partial redemption on the Capital Southwest Corp (CSWC) 5.95% baby bonds. CSWC is a BDC. No harm is done to holders on this call as shares have been trading in the $25 PLUS accrued recently. The SEC filing is here.

CenturyLink (CTL) has announced a partial redemption of the Qwest 6.625% baby bonds (CTZ) issue on 9/15/2020. They will redeem 10 million shares. There are a total of 16 million shares outstanding. The press release is here.

Of course the big item of the week was the surprise call by Southern California Edison (a division of Edison Internation EIX) on old preferred shares that had been outstanding for decades. The big winners were those holding the SCE-D issue which had a bonus redemption price of $28.75 and was trading at $23.87 just prior to the fall announcement. From my reading we had numerous folks holding shares in these issues.

I see that folks are back talking Canadian Preferreds and Gridbird offers up this website for Canadian info. Looks like a good resource for those interested.

Don L posted a press release on the new Sachem Capital (SACH) baby bond–it priced at 7.75%–looks like the issue will be small-around 1/2 million shares. I have not posted the pricing as the SEC filling has not yet been made as of now. Will be a week or so before the new issue trades under ticker SCCC,

Lodging REIT Ashford Hospitality (AHT) has begun turning in the keys to hotels they owned as lenders begin to put their properties up for sale–when you can’t come to agreement with lenders they eventually take the properties–all of Ashfords properties are ‘non-recourse’ to the company so they turned over the keys to an 8 property portfolio this week. As I wrote before I think AHT is essentially broke and will liquidate in the year ahead with common and preferreds holders getting zip.

The Fed Balance sheet fell by $20 billion last week–obviously the buying of treasuries, mortgages and other assets by the Fed in the weeks and month ahead will be ‘lumpy’. There is so much money sloshing around the globe that the Fed hasn’t had to do much buying. There have been a number of huge treasury auctions in the last few weeks and the market has had no trouble buying everything available.

Southern California Edison Calls Preferreds and Trust Preferred

Utility Southern California Edison (a division of Edison International EIX) has announced a call of some old preferreds with coupons ranging from a low of 4.08% to 4.78% as well as their 5.10% Trust Preferred shares–the redemption date is 9/27/2020.

All of the old preferred will be redeemed at premiums–with the SCE-D issue garnering a $28.75 redemption price (plus accrued dividends)–it is currently trading at $23.87.

The company has an additional 4 issues of trust preferreds outstanding, but they are not yet callable.

The company press release can be found here.

The issues–SCE-B,C,D,E can be seen here and well as the SCE-G issue.

Thanks to Ptrader for being up early and noting this call.

Real Estate Lender Sachem Capital to Sell New Baby Bond

Hard money lender REIT Sachem Capital (SACH) has announced a new issuance of baby bonds.

The company generally makes shorter term loans (i.e. 12-36 months) for real estate, both commercial and residential. The average interest rate charged is around 12-13%.

The issue will have a maturity date in 2025 and an optional early redemption in 2022.

The company has 2 other baby bond issue currently outstanding and you can see them here.

The preliminary prospectus can be read here.

Thanks to EarlyBird for catching this one.

Gabelli Utility Trust Preferred Ripe for a Call

I was reviewing the large volume issues from today (large compared to normal daily volume) and I noticed an old friend of mine in the list–Gabelli Utility Trust 5.625% preferred (GUT-A) had traded just 8,700 shares–but that is 7 times normal volume.

It wasn’t really the volume that caught my eye–it was the ridiculous share price that stood out—$27.81 and optionally redeemable since 2008. I think investors are just daring Mario Gabelli to spank them with a 10% loss.

With the call of the Gabelli Dividend and Income preferred (GDV-A) on Monday you would think they maybe would be keeping their eye on other potential calls–especially because they could replace called issues with sub 5% new preferreds if they desired.

I mentioned this as being an ‘old friend’ as I held it for many years – even after it was redeemable–but I guarantee you it was never this far out of line in price.

Gabelli has always been kind of slow to call issues, but it is becoming more difficult for a fund manager to explain to common holders that it makes sense to line the pockets of preferred holders at the expense of the common people.

I am watching for a call here.

Is the Double Dip Coming?

While we are still in a recession so this isn’t really a potential ‘double dip’ are going to see the second downward push in the economy soon?

For years I have watched employment and consumer confidence for clues as to where we were heading in the economy–I quit watching these closely during the last 6 months as the Fed and the treasury overwhelmed fundamentals with never ending money drops–but maybe it is time to watch again.

The Conference Board released their take on Consumer Confidence today and it wasn’t good. The Consumer Confidence Index fell to 84.8 from 91.7 last month–this is a damned big drop. ‘Analysts’ (who ever that is) were expecting an increase in the reading–so much for the smart folks. Seems to me with the $600/week extra cash from the federal government going away confidence both by the employed and the unemployed would head south–we are talking maybe $6 billion a week going away–real money (or is it just fake paper fresh off the printing press?).

The Conference Board press release can be read here.

Last week we had a 1.1 million first time unemployment claims number–up from 910,000 the week before–are small businesses simply running out of cash and having to lay off folks? I didn’t dig into this one, but anecdotally I had 2 nephews get laid off last week–1 in Colorado and 1 in Kansas. Both worked in hospitality related businesses–the businesses simply continue to suffer and eventually lay offs have to happen. In this case both nephews are around 50 and this will be a tough time for them.

Black Knight released the latest mortgage data report last Thursday and there was a bit of improvement overall–but with the $600 weekly going away is this going to worsen again? Their report is here.

While overall mortgage delinquencies improved a bit FHA borrowers are not paying their mortgages–a full 16% of all of them are delinquent!! Yikes!! This is up from 9.7% the month before. While I am for everyone that wants a house to have one–the facts are, time and time again, that when you have little ‘skin in the game’ and you lose your job defaulting is always an option. The feds have a forbearance program and payments can be deferred for up to a year–any wagers on how many of these folks will walk away from their property at some point in the future? A short article on the recent number can be read here.

So the time is here to again watch numbers closely. The wild card being how much money congress will throw at the problem in the weeks ahead–not that money will help in the long term–we are creating zombie businesses, zombie homeowners, zombie employees–when will the ‘piper be paid’?

CEF Gabelli Dividend and Income Calls Preferred for Redemption

Now just how soundly do you have to be napping to be caught holding the Gabelli Dividend and Income 5.875% (GDV-A) cumulative preferred stock when it is trading at $26.35 and has been optionally redeemable since 2009?

Those holders got a 4% lesson yesterday–as a call was announced and the ‘dump’ was swift–tumbling 97 cents.

The redemption will occur on 9/25/2020.

The company had previously called 1.542 million shares on 5/6/2020 so that should have alerted folks shares were in the company sights for a full redemption–but memories are short nowadays and after a fall after this earlier call folks drove the price right back up.

On the other hand holders have garnered a great, safe dividend for many years by holding shares so I guess holders turned out ok–unless you bought last week.

The press release on the redemption can be found here.

mcg was on this at 2:23 pm as was Ptrader 3 minutes later noting a volume spike. I was reviewing the preferred share loss page at the same time and noted the large drop in the issue–I instantly knew a call was at hand–it had traded 25 times normal volume. Posting was on the Reader Initiated Alert page.

Delisted Legg Mason Baby Bonds to Trade OTC

Legg Mason, which was recently acquired by Franklin Resources (BEN), had 2 baby bond issues outstanding at the time of merger, which had previously been announced that they were to be delisted from the NYSE on 8/20/2020. These baby bonds were delisted.

Today it was announced that these issues would begin to trade on the OTC market–I would expect maybe tomorrow or Wednesday.

The ticker for the Legg Mason 6.375% Junior Subordinated Notes will be LMICL while the 5.45% Junior Subordinated Notes will trade under ticker LMIBL.

I now have these in the database as Franklin Resource (BEN) issues and they can be seen here.

EarlyBird noted the new tickers at 2:30 pm today.

Monday Morning Kickoff

With critical consumer confidence continuing to be measured at a very low level, relative to readings just 6 months ago, commons stocks, as measured by the S&P500 continue to move higher.

The University of Michigan Consumer Sentiment survey tells a different story than the stock market–this will not end well–although it may remain irrational for quite a long time.

The index traded in a range of 3354 to 3400 closing the week at 3397 which was 3/4% higher than the Friday before.

The 10 year treasury, which had closed at a recent weekly closing high of .71% the Friday before fell back to close at .64% Friday. Weekly jobless claims spiked up to 1.1 million versus a forecast of 910,000 which helped to keep rates moving lower. Is this the double dip fall in employment?

The Fed Balance Sheet grew by a pretty healthy amount last week–$53 billion–the largest amount since 6/10/2020. The Fed has announced plans for the period of 8/14 to 9/14 to purchase $80 billion in treasurys–so after modest purchases the last few weeks a large jump is no surprise.

The average $25/share baby bond and preferred stock moved slightly higher–up 13 cents/share. Banks were the strongest group – up 30 cents. Investment grade issues were up 16 cents, CEF issues up 4 cents and utility issues up 17 cents. mREIT issues were flat.

Last week we had 3 new issues price.

Prudential Financial (PRU) priced a new 4.125% Junior Subordinated Note. I am not aware that this issue is trading as of yet, but I believe I saw a few folks buying via their brokers bond desk in the $25.30-$25.40 area.

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Small bank holding company CNB Financial priced a 7.125% non-cumulative preferred. The issue is trading now under the OTC temporary ticker CCNEL and last traded at $25.26.

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Lastly lodging REIT DiamondRock Hospitality (DRH) priced a new cumulative preferred with a coupon of 8.25%. The issue is now trading under OTC temporary ticker DRHPP and last traded at $24.70.

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Lots of Great Ideas on New Commenting System

I asked for input on a new commenting system this week and I got lots of good suggestions–of course more good ideas than could ever be implemented in total–but lots of thoughts that can probably be added in.

I will print all the suggestions and then try to match them up to the commenting systems out there and see what might be best.

Also on the topic of commenting I will ‘dial up’ the monitoring of comments. What does that mean?

I have a master page of all comments as I have mentioned before–no matter where on the site a comment is made it shows up on the screen so I will be able to act if necessary.

I ask that everyone be ‘civil’–what does that mean? It is ok to have disagreements, but state your case and move on. We don’t need to have back and forth Pendragon’Y type exchanges (you know back and forth for 100 comments).

The reason I have never made a recommendation on buying a security on this site is because each and every one of us is different–hardly ever is there a right or wrong answer—just the one that works for you.

It seems to me that 100% of people reading the site should be able to comment on their position without any personal attacks–certainly there will be differences of opinions, but they can be stated civilly without personal attacks.

Honestly with over 100,000 comments made there has only been a dozen or two that I know of (and of course I don’t know them all) that should not have been made (in my opinion) and a reasonable person has to be happy with that–there is just no way we are going down the road of the old Yahoo Finance message boards–no way.

Triple Net Lease REIT VEREIT Calling More Preferreds

VEREIT (VER) has announced they are redeeming another 6 million shares of the 6.70% cumulative preferred (VER-F).

Of course over the years this issue has been PARTIALLY redeemed many times–it was a giant issue to start–almost 43 million shares. With this new call outstanding shares should be in the 18 million shares area.

newman and bob caught this press release from the company 90 minutes agO and posted in the Reader Initiated Alerts page.

Investors had a chance to sell in the $25.70 area a few days ago. I had bought last time there was a partial redemption down around $25–but took a nice profit (2% I think) a few weeks or so later.

Shares are now trading around $25.26.

I have a low ball order in just in case someone wants to panic and give me a few shares.

DiamondRock Hospitality Prices a Juicy Preferred Issue

REIT DiamondRock Hospitality (DRH) has priced the previous announced cumulative, non qualified preferred stock.

The coupon is 8.25%–a very juicy coupon from a quality lodging REIT–BUT like all lodging REITs you can be good–but you need some business. This one will be interesting to watch.

The issue will trade on the OTC grey market (as noted by aview a few hours ago) with the temporary ticker of DRHPP.

The pricing term sheet can be found here.

Earn 0% with this Junk Rated Convertible Note

I thought I was seeing things when reviewing a prospectus a minute ago for Hannon Armstrong Sustainable Infrastructure Capital (HASI).

They are offering $125 million in 0% senior convertible notes maturing in 2023.

Looking through it I guess you are simply buying a call option on the common shares with a $48.36/shares strike good for 3 years.

I guess in theory this could work out, but how about 1 or 2% for the holder?

This one I know I will take a pass on.

The prospectus is here.

Bank Holding Company CNB Financial Finally Prices New Preferred Issue–Update OTC Ticker

The OTC ticker for temporary trading is announced as CCNEL–although OTC has been known to change these when trading begins.

Bank holding company CNB Financial (CCNE) has finally priced their previously announced new preferred issue.

The issue prices with a coupon of 7.125% which seems to be a little skimpy to me given their level of exposure to retail, hospitality and other widely affected businesses during the pandemic.

Make sure to do plenty of due diligence on these small banking issues–personally I have been ‘flipping’ them–no long term holds.

The issue will trade on the OTC grey market but the ticker is not yet known.

The pricing term sheet can be read here.

david was on this announcement at 2 hours ago.

DiamondRock Hospitality to Sell New Preferred

DiamondRock Hospitality (DRH), a lodging REIT, has announced that they will issuing a new series of preferred stock.

The issue will be cumulative, but non qualified.

DRH is a lodging REIT with 31 properties and total normalized revenue near $1 billion.

It has been years since I have followed DRH and it will be most interesting to see how this issue prices.

The preliminary prospectus is here.

Public Storage Calls 2 Preferred Issues

Public Storage (PSA) which had issued a new 4.125% cumulative preferred last week (a $200-$225 million issue) announced a call on 2 older issues late today.

While the new issue provided enough new money to call 1 issue, obviously the company dug into their cash hoard (they had $1.3 billion in cash on 6/30/2020) to call both issues

PSA-W ($500 milion) and PSA-X ($225 million) , both which carry coupons of 5.20%, are being called. The press release is here.

The call will occur on 9/30/2020–a normal dividend payment date.

Input Needed for Commenting Upgrade

About a year ago folks asked for the ability to ‘edit’ their comments after publication–the native wordpress system did not allow for editing. At that time I thought I would go ahead and change the entire commenting system.

Then I found a wordpress ‘add in’ that allowed ‘editing’ of comments (which is set at allowing 5 minutes for edits)–which took care of that immediate issue.

NOW it looks like it is time to upgrade the commenting system to something that allows a more robust search capability–to search by user name–maybe to allow ‘scoring’ of comments–to get notification when someone responds to your comment–etc, etc. There are many, many possibilities in commenting systems.

So what I am asking ALL OF YOU is if there is a commenting system somewhere that maybe you use that you think has lots of great features? If you could let me know the website I could look at it.

If there isn’t one that you are aware of then simply what are some features that you would think would be desirable?

In about a week I will make a decision on a change. I have about 10 options so far–and of course they all sound great, but without seeing a live system who really knows. If I choose the wrong one–oh well we will just move onto a new one.

Please leave some feedback for me – it would be helpful.

Little Buying and Little Selling

Just a note on a few of the buys and sells I have done lately.

I sold some of my Tri-Continental 5% $50/shares preferred. I held 300 shares for years and this time as it trades up around $57.50 (and sometimes $58.40) I decided to ‘lighten up’. This issue has been outstanding since 1963 and likely will continue to remain outstanding, but with a call price of $55/share I decided to let some go–I am open to re-buying down around the call price.

I sold a 1/2 position of the Wesbanco 6.75% fixed-rate reset preferred which was a new issue from 8/4. I bought it for $25.50 and sold for $26.25. I am not buying any of these small bank issues to ‘hold’–just to flip.

I bought a full position of the new Federal Agricultural Mortgages 5.25% non cumulative preferred at $25.11 a day or two after it was issued. I see it trading at $25.58–think I will hold this position unless it goes totally crazy.

Lastly, I added a couple hundred shares of the Highland Income Fund 5.375% preferred (HFRO-A) at $24.86. While I am not thrilled with the Highland Income Fund (HFRO) as long as it is strongly investment grade (A1 from Moodys) and their asset coverage ratio remains reasonable good – 276% as of 12/31/2019 I will hold it as I can’t get investment grade issues with current yields of 5.40-5.50%.

Comments, Commenting and Hijacking Threads

As is pretty typical of most websites I have ever been on comments on articles tend to drift ‘off topic’. No giant surprise on that happening–at least not to me.

At this time I need to reinforce the need to comment in the correct areas. If the comment isn’t relative to the topic (for instance a new issue) it should be made in the correct area. Some areas for miscellaneous chatter are listed below.

Sandbox page.

This area is for most anything you want to post.

REIT chat.

This should be obvious–talk about REITs.

Reader Initiated Alerts

A popular page–obviously to have quick announcements on new issues–redemptions etc. Since I can’t monitor all the data 24/7 this page is the most timely. While I get to the new issues etc–it is usually an hour or two after some folks have the news.

Canadian discussion

Again–obvious–for Canadian related issues. Many folks buy the Canadian preferreds and discuss them here.

All of the available pages are in the RIGHT HAND COLUMN.

Because of the ‘off topic’ commenting the thread is ‘hijacked’ to another topic, which makes it difficult for those wanting to find older comments to find them as they have to wade through 100’s of ‘off topic’ comments to find what they need.

If folks could try to adhere to some level of on topic commenting things will be a bit more organized in the comments.

Thanks all for you help.

Prudential Financial Prices Baby Bonds

Prudential Financial (PRU) has priced the new baby bond previously announced with a rock bottom coupon of 4.125%.

Of course the issue is investment grade.

There is no OTC grey market trading in this debt issue–and in fact the company didn’t even announced a tentative ticker symbol. Anxious investors will need to contact their broker with the CUSIP if wanting to buy the issue before exchange listing.

The company will be calling the 5.75% (PJH) baby bond as well as the 5.70% (PRH) baby bond with the proceeds of this new issue. Both issues to be called tumbled around 3% yesterday.

The pricing document can be read here.

Prudential Financial to Sell Baby Bonds

Prudential Financial (PRU) will sell a new issue of $25 baby bonds.

The Junior Subordinated Notes will have a maturity date in 2060 and a optional redemption date of 9/1/2025.

The company currently has 3 other baby bonds outstanding, 2 of which are currently optionally redeemable. CORRECTED–the company intends to call the 2 redeemable issues (thanks Jag).

The issue will be investment grade.

The 3 outstanding issues can be seen here.

The preliminary prospectus can be read here.

mcg was right on top of this one at 7:45 am this morning with EarlyBird positing yield talk in the 4.50% area.

Community Banker CNB Financial to Sell Preferred

Pennsylvania banker CNB Financial Corp (CCNE) will be selling a new non cumulative preferred issue.

CNB Financial is a fairly small banking company with just $4.4 billion in assets.

The issue will be fixed rate and have the typical optional redemption in 2025.

The permanent NASDAQ ticker will be CCNEP after it trades on the OTC grey market for a week ot two.

The preliminary prospectus is here.

The company has a new investor presentation here.

Monday Morning Kickoff

The S&P500 traded in a range of 3326 to 3379 before closing the week at 3373–there was a gain of a bit less than 1% on the week.

The 10 year treasury yield traded in a range of .55% to .72% before closing at .71%–the highest weekly close since June 5.

The Fed Balance Sheet grew by $12 billion last week–the 1st increase in 3 weeks. With interest rates popping last week because of relatively massive supply from the treasury we may well see the balance sheet grow at a faster clip ahead–we will see if there is enough liquidity sloshing around to soak up the issuance.

After pausing 2 weeks from relentlessly upward movement the average $25/share preferred stock and baby bond moved higher again last week. The average issue moved 1% higher with lodging issues moving 3% higher, mREIT issues moving 3% higher while utilities moved just 1/2% higher. Investment grade issue just barely moved higher by less than 1/2%. Obviously the theme is junkier issues drove the week higher.

We had 3 new income issues sold last week.

US Cellular (USM) priced a new issue of baby bonds at 6.25%. The ticker will be UZD when the issue begins to trade (no OTC trading)–I note that eTrade has the ticker ‘set up’.

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Self storage giant Public Storage (PSA) priced a new issue at the rock bottom coupon of 4.125%. In spite of the coupon the issue closed trading last week at $25.48–trading on the OTC market–ticker PSAGL (note the OTC ticker below is not correct–changed after publication.

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Lastly Federal Agricultural Mortgage Corp (AGM) priced a new issue at 5.25%. The issue is trading on the OTC market under ticker AGMFP—closed trading last Friday at $25.02.

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Farmer Mac Prices New Preferred

Federal Agricultural Mortgage Corp (AGM) has priced their previously announced new non-cumulative preferred.

The issue will carry a coupon of 5.25% and will be non-cumulative, but qualified.

The company also announced a call (although no official notice of call has yet been issued) of the 5.875% series a issues (AGM-A) which has been redeemable since 2018.

Holders of the AGM-A issue are sleeping a bit as shares closed at $25.80 today–with 30 days notice of redemption holders will likely take about a 50-55 cent loss. My guess is the lack of information has left most holders in the dark.

The company announcement of the pricing can be found here.

There will be a SEC filing soon on the issue, but in the meantime the issue will begin trading immediately.

EarlyBird had the details on this issue at 1:22pm this afternoon in Reader Alerts. We always wait for published details before posting our announcement–watching the Reader Alerts page is always most timely.

Federal Agricultural Mortgage Corp to Sell New Preferred

Federal Agricultural Mortgage Corp (also known as Farmer Mac) (AGM) will be selling a new non-cumulative preferred stock.

Few details are know on the new issue as of this moment as Farmer Mac doesn’t file with the SEC in the same manner as most companies. Farmer Mac was chartered by the federal government in 1987 and is regulated by the Farm Credit Administration–thus they follow rules that different from the run of the mill company.

Farmer Mac has 4 other preferred stock issues outstanding which can be seen here. The outstanding issues have coupons ranging from 5.70% to 6% with the 6% issue being a fixed to floating rate.

We will post further details as they are known.

mbg chimed in that the new issue will trade with the OTC ticker of AGMFP (always subject to change before trading begins).

EarlyBird was on this issue at 9 am this morning with Potter jumping a bit later. Yield talk is in the 5.375% to 5.50% area.

2whiteroses mentioned that he/she is unable to find prospectuses for the Farmer Mac issue. If you go to the individual security page on this site we have the link to the Certificate of Designation of Terms and Conditions for each issue.