Our site runs on donations to keep it running for free. Please consider donating if you enjoy your experience here!

Down, Down It Goes Where It Stops No One Knows

But really the selloff of common shares is really quite orderly and certainly is not a panic selloff. We all know common shares have been near la la land–so a 800 Dow point drop is not frightening or unexpected.

Of course I care about baby bonds and preferreds and the damage there is not dramatic. Right now the average share is off 14 cents, but there are over 150 issues down by over 1%. This is a larger reaction than we have seen in recent months to common share selloffs–but still minor.

Interesting to see quite a few utility issues off 1/2%- 2% or so–but given the levels they have been trading at being down 1/2% to 2% doesn’t make them a bargain–but worth watching.

Investors should keep an eye on the S&P500 and DJIA and see if something more serious develops later in the day. If we were to see the 3% drop turn into 5% later today we would start to see some ‘baby going out with the bath water’–maybe a chance to deploy a couple percent of dry powder in quality issues.

Monday Morning Kickoff

The S&P500 fell by 22 points last week–about .6%. The index traded in a range of 3292 to 3429 closing toward the bottom of that range at 3319.

As has become the norm the 10 year treasury traded in a range of .65% to .70% closing the week at .69% 2 basis points above the week before.

The Federal Reserve balance sheet grew by a stout $54 billion proving that quantitative easing is alive and well.

The average $25/share baby bond and preferred stock moved higher by a meager 7 cents. Investment grade was unchanged, utilities were 6 cents higher, CEF issues were down 12 cents (but 1/2 the issues were ex-dividend Friday). banks were 2 cents higher with shipper up 4 cents. Lodging REIT preferreds were the strongest–up by 45 cents.

Last week we had 6 new income issues sold.

Business Development Company OFS Capital (OFS) sold a new baby bond.

The issue priced at 6.25% which at first glance seems low–but the issue is just a 3 year issue, maturing in 2023 and shorter dated maturities price lower.

There will not be OTC grey market trading. The issue should begin trading in the next week or so.

Brookfield Infrastructure Partners (BIP) sold a new issue of preferred stock units.

The issue priced at 5.125%.

The issue is investment grade–although low investment grade at BBB- from S&P.

This issue is trade on the OTC market closing at $25.16 on Friday.

Franchise Group (FRG) priced a new issue of preferred stock.

The coupon is 7.50% and the issue will be cumulative and qualified.

There is no OTC ticker or trading, but it will trade today or tomorrow under the permanent ticker.

The Southern Company (SO) has sold a new issue of baby bonds. The coupon will be 4.20%–plenty low, but it will be strongly bought.

As announced the company will be calling all or a portion of the 6.25% Jr subordinated debentures (SOJA).

The issue is investment grade.

The issue is not yet trading.

Insurer WR Berkley (WRB) has sold a new issuance of baby bonds.

The coupon is set at 4.25%. The bonds are investment grade.

The bond will mature in 2060 and will have an optional redemption starting in 2025. The company may defer interest payments for up to 5 years (multiple times) without being in default.

Proceeds from this issue will be used to call the balance of the WRB-B 5.625% baby bonds.

The issue is not yet trading.

Affiliated Managers (AMG) sold a new baby bond.

The coupon will be 4.75%. The issue is investment grade being Baa1 by Moodys and BBB- by Standard and Poors.

The issue has a maturity date in 2060 and an optional redemption period starting in 2025.

The company can defer interest payments for 20 consecutive quarters without being in default.

Affiliated Managers Prices Baby Bonds

Affiliated Managers (AMG) has priced their previously announced baby bond.

The coupon will be 4.75%. The issue is investment grade being Baa1 by Moodys and BBB- by Standard and Poors.

The issue has a maturity date in 2060 and an optional redemption period starting in 2025.

The company can defer interest payments for 20 consecutive quarters without being in default.

The pricing term sheet can be found here.

Affiliated Managers Group Joins the Baby Bond Issuance Parade

Another investment grade baby bond is being issued by Affiliated Managers (AMG).

The company joins the issuance parade of investment grade firms selling baby bonds to lock in some nice coupons. The company is rated BBB- by S&P and Baa1 by Moodys.

The new issue will have a maturity date of 2060 with an early call in 2025.

The company may defer interest payments for up to 20 consecutive quarters without a default.

The company has 1 other baby bond outstanding as well as 1 convertible trust preferred issue which is callable now. These issues can be seen here.

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

mcg was on this one.

WR Berkley Prices Baby Bonds

Insurer WR Berkley (WRB) has priced their new issuance of baby bonds.

The coupon is set at 4.25%. The bonds are investment grade.

The bond will mature in 2060 and will have an optional redemption starting in 2025. The company may defer interest payments for up to 5 years (multiple times) without being in default.

Proceeds from this issue will be used to call the balance of the WRB-B 5.625% baby bonds.

The pricing term sheet can be found here.

WR Berkley Announces New Baby Bond

Insurer WR Berkley (WRB) has announced a new issuance of baby bonds.

The company which had sold a 4% $1,000 senior note issue around 9/1/2020 with proceeds going to a partial redemption of baby bond 5.625% (WRB-B) will be using some of the proceeds of the new baby bond to call the remainder of the WRB-B issue.

The new issue will be investment grade so look for a coupon in the mid 4’s.

The preliminary prospectus can be seen here.

j was on top of this new issue.

Southern Company Prices Baby Bonds

The Southern Company (SO) has priced their previously junior subordinated debentures.

The coupon will be 4.20%–plenty low, but it will be strongly bought.

As announced the company will be calling all or a portion of the 6.25% Jr subordinated debentures (SOJA).

The issue is investment grade.

The pricing term sheet can be found here.

Franchise Group Prices New Preferred

Franchise Group (FRG) has priced their previously announced new cumulative perpetual preferred issue.

The coupon will be 7.50% will be cumulative and qualified.

No OTC grey market ticker has yet been announced–the trade on the issuance doesn’t take place until today so I suspect we will see the OTC ticker sometime today.

The pricing term sheet can be see here.

Past 1st Call and Trading Above Liquidation Preference–Until It Isn’t

Markets are dangerous for snoozers and dreamers.

Data center owner Digital Realty (DLR) has called their 5.875% perpetual preferred today–effective 10/15/2020.

The issue went ex-dividend yesterday for around 37 cents.

The issue has been redeemable since 4/2018, but yet was trading near $26 a day or two before ex–it went ex for 37 cents but bounced right back up toward $25.90. The company dropped the call this morning and shares are now trading at $25.06.

It is interesting that DLR is selling Euro Note debt at 1%–hint–don’t be fiddling with investment grade preferreds past call dates.

Of course we all mostly know this, but I post it as one more example of what a newer investor should not do.

Southern Company to Sell Baby Bonds

Giant utility Southern Company (SO) will be selling a new $25 baby bond. It is noted that the company will be selling a $1,000 series at the same time.

This baby bond will have a maturity in 2060 and proceeds will be used to redeem all or a portion of the 6.25% Junior Subordinated Notes (SOJA).

The issue will be investment grade.

The company has numerous issues outstanding which can be seen here.

The preliminary prospectus can be read here.

EarlyBird got the worm on this one and posits a coupon in the 4.375%-4.50%.