I will be adding a new link titled “Sandbox” in the right hand menu.
That link will get you to this page.
I had originally set up the “Reader Initiated Alert” page for ‘alerts’. I was thinking this, for instance, might be when a preferred stock is undergoing a temporary selloff and someone wants to let the population know about it quickly. Of course we all (including me) use the ‘alert’ page for general messaging.
I am requesting that we start using the Sandbox page for all general talk, and try to preserve the ‘alerts’ page for ‘alerts’.
I have had a screen up on one of my monitors all week where I see all comments – no matter where they are posted–it is a great page and I wish everyone had a page like that–believe me we all benefit from all the knowledge being shared. I don’t want to stifle any of the exchange of knowledge, but hope to get things a bit better organized by adding the Sandbox page.
I have been unable to find First Busey Corp 8.25% Preferred listed in III since becoming available. Ticker symbol is BUSEP. Thanks
It’s not on the master list.
https://innovativeincomeinvestor.com/first-busey-prices-new-preferred-shares/
Lyn Alden new public newsletter.
“3 Misconceptions About US Debt”
https://www.lynalden.com/june-2025-newsletter
I vote Lyn to replace JPOW when its time (age)
DXY (dollar index) monthly log chart with channel.
https://www.tradingview.com/x/bYUwt6Co/
About 10% above the ’21 low– goods & travel (if you dare) going up in price for us.
Yay
Put this in the category of “buyer beware” and DYODD, especially when it comes to HY investments.
https://www.bloomberg.com/news/articles/2025-06-17/easterly-high-yield-muni-fund-plunges-nearly-50-in-sales-dump?sref=F7P7bRzx
https://files.constantcontact.com/0ac93b72501/9dd9006c-e954-42c2-83e7-1e017428e9f9.pdf
https://funds.easterlyam.com/rocmuni-high-income-municipal-bond-fund/
below is a copy and paste of the Bloomberg link – for those that can’t access
Easterly Funds’ high-yield municipal-bond fund has dropped almost 50% since Friday as the portfolio unloaded illiquid securities from the riskiest part of the muni market, according to people familiar with the matter.
The Easterly RocMuni High Income Municipal Bond Fund net-asset value fell to $3.16 on Monday from $6.15 on Friday morning. Its assets have declined to about $67 million from about $245 million at the end of February.
“The fund was repositioned to improve liquidity and continues to seek investment opportunities,” Nneka Etoniru, a spokesperson for Easterly, said in an emailed statement. Etoniru said the fund is not liquidating.
Easterly’s high-yield muni portfolio is stuffed with debt issued for biofuel projects, recycling facilities and retirement homes, according to data compiled by Bloomberg. Those kinds of credits rarely trade, making price discovery spotty.
Birch Creek Capital, in its weekly muni commentary, referred to a spate of selling from a fund that included a large portion of distressed securities, limiting the buyer pool. Birch Creek, which targets high-yield and distressed munis, didn’t name the fund.
“Many of these bonds traded at massive discounts to their evals, underscoring the risk involved in investing in the most speculative projects,” Birch Creek said. “While this portion of the market may unearth rare opportunities for outsized returns, we believe this is best left for firms that have deep expertise in distressed credits and complex workouts.”
Thank you Maine.
$6.16 to $3.15 for a bond fund. WOW. Now I see why they call it junk.
The largest holding is in default and traded at 29.75 recently. On a quick search I couldn’t find the next few
some of the coupons on the lose holdings were wild. 8% tax free? yowza.
fund said it had 1m minimum, guess you gotta be able to take a haircut.
I have some of the Muni closed end funds, and compared the holdings and look at the Muni market every day….but little of what easterly held was familiar to me
Lt, I was naive in thinking all these years that most muni bonds are safe. Between a public authority to tax and having insurance.
Having been on this site for years it wasn’t until you and several other people started posting the last couple years that I found out that not all municipal bonds are as safe as people have made them out to be. As a matter of fact until Tex posted that some of these bonds for public projects are not even backed by a public authority and no recourse if they default.
This potentially has more implications to III’ers than what you might think. Note this fund had multiple share classes with minimum investments from $2,500 to $1 million. My best guess is that the fund had several redemption requests in a very short period, like 1 day. And since it is not a leveraged fund, was forced to sell something, anything to meet the redemption request.
If you think preferreds are illiquid, you ain’t seen nothing yet. Many and I mean MANY, MANY individual muni bonds are far more illiquid that preferreds. They trade so called “by appointment.” A majority of muni bonds do NOT have standing bids, i.e. offers to buy This is why retail investors typically have to call in to brokerages like Fido, Schwab, etc. and request a bid to buy that issue.
A majority of institutional muni bond trades are done either by phone and/or Bloomberg chat. Works fine in normal markets with investment rated Munis. In high stress times with junk rated Munis, not so much. When this fund put out their list of “bid wanted”, the sharks started circling. And the issues sunk to the bottom.
This scenario COULD play out the same on MANY of the preferreds/baby’s we talk about. A few facts from today (6/18/25)
Total prefs/baby/terms that were active= ~ 875
Total with less than $10k traded= 172 (19.7%)
Total with less than $100k traded= 420 (48%)
Total with less than $500k= 711 (81.3%)
What do you think the price would be if you were FORCED to sell in one day say a $1 million position in any of these?
For the 420 issues that traded less than $100k, you can easily imagine them falling through the floor. You would be lucky to only drop the price in half in one day. In many, many cases, IMO, you literally would not be able to sell $1 million at any price. The firms that have standing “stub quotes” which might literally be 1 cent do not show large quantities to buy. This is on the “lit” exchanges that show bids/asks. What is unknowable are all of the “dark” aka hidden orders. You don’t even know which issues have open dark orders in advance.
BOTTOM LINE is that this could occur if large market sells orders hit the books. Not saying that it will occur, but I suggest NOT trying it.
This is really nice color to how the market works. Makes me think that the closed-end fund wrapper has a distinct advantage. I roll around in the muni junk pile a little bit, but the kinds of things I saw in that fund were wild.
Your other commentary, of course, lends itself to all the things we hear about why the ETFs avoid certain issues, can’t even build positions, and that this corner of the market is nice and inefficient, in good and bad ways.
The PFFA fund manager went on the record recently and said he was 3x levered into PFFA so he could recreate index type returns (20% cagr) – he pointed out that he had a bunch cash on the side to solve a margin call, but also said (and I paraphrase) ‘I feel better about the whole preferred sector because the volatility serves and a rationale for the excess returns’ – of course, the cash either flows or it doesn’t.
Can’t lie that the mutual fund in question has me rethinking some of the risk profile on the muni closed-funds I use, but I think Tex is probably on the money here and the mutual fund format forced their hand.
cheers and thanks all around.
jb
I own a bunch of unrated NV improvement district bonds, and have detailed here why I think they are solid. If I go to sell one, there’s never a bid except that offered by a BD, and it’s usually Stifel because they brought most of these to market.
Where IB will let me bid, which is generally only if there is an offer , I usually place a GTC bid that would result in a great yield , and immediately offer anything I buy at a price 5 points higher.
I’ve done just a few of those trades this year.
Speaking of munis and CEF. I am looking at KTF, MHI, MAV and MIO. Monthly income federal tax exempt. All scheduled for redemption at NAV in the next 18 months and are trading at discounts.
IBKR is no longer such a great source for bonds. I find myself forced to buy HY bond funds as most individual seem 144 or no liquidity. Just do not have the time to pursue the individual bonds.
Does it concern you that with KTF for example, almost 1/2 of the monthly distribution is ROC?
I’ll take a look at those. Thanks for the symbols.
I’ve got a separate page on TWS for each NV improvement district where I’ve owned a bond or seen one traded in the past, and I’ve listed all the bonds of that SID .
I only check these occasionally, so I could be missing bids and offers posted.
There were some great trades earlier in the year when I was super concerned about the loss of the muni bond exemption. Who knows what will happen with this in the future as spending continues to exceed revenue.
Just like the Inflation Creation Act, the One Big Awful Bill continues the mess
TNT, I took at quick look at the first two CEF’s you mentioned: KTF and MHI. Both are 1 star rated from Morningstar based on past results. Less kindly stated, they have performed miserably. The reason management is liquidating them early is possibly embarrassment. You literally could have thrown darts at their investing options when they were formed and performed better.
These two funds fit perfectly with the thesis of this thread. They are both liquidating in the near term. So, all potential buyers know the funds must sell all of their positions. Obviously, this gives the buyers the advantage. There is one other negative regarding these two funds. They hold a ton of long-term issues maturing 20+ years out. This is why the fund must sell them as opposed to a fund that buys issues that mature before the fund liquidates. When the price drops because the sharks have bought, the NAV of the funds will drop.
BOTTOM LINE is my loosely held guess that money market funds will have a higher total return between today and when the funds are closed. Any interest payouts will be more than offset by the drop in NAV. You could build more precise models forecasting every issue these funds holds, but it would take many hours.
The expense ratios on all four of these funds are very high — well over 2% for each of them.
**************************************************
From Bond Buyer dot com which is mandatory viewing if you invest in individual muni bonds
**************************************************
Some of the credits represent high-profile defaults and distress across the market: Legacy Cares, the Proton International Alabama, LLC, and Ohio’s Purecycle Technologies (PCT).
On Friday, an investor paid two cents for $800,000 of the Alabama proton center bonds with a 6.85% coupon and 2047 maturity, according to Electronic Municipal Market Access. The most recent trade before that was in 2021, for 114.
A buyer on Monday bought $2.6 million of Purecycle (PCT) bonds with a 7% coupon due in 2042 for 50 cents on the dollar. The bonds traded in February 2024 for 102.
A $3.2 million chunk of bonds issued for borrower Gladieux Metals Recycling LLC sold Monday for 4 cents. The paper carries a 9% coupon. It last traded for 102 in April 2023.
The Gladieux paper, which has been in default for years, was listed as the fund’s top position at the end of the first quarter
ATCOprH. Atco has proposed to redeem this stock on July 7, maybe all, maybe some. According to the prospectus they have to give at least 15 days notice. Anyone have the skinny on this??? The current price does not reflect an immanent redemption.
I think you have the tickers confused. ATCOL is being redeemed on 7/7. A redemption notice has not been sent yet for ATCO-H/D. They are “intended” to be redeemed in Q1, w the possibility of only a partial call for H.
I own them all. I think they trade (slightly) cheap because it is not a widely followed issue.
Jack, where do you see redemption of ATCO-H on July 7th?
I can’t find the reference. But, I remember ATCO stated they were going to recall some of the H. I have not seen an actual recall. If they are going to do the H they have less than 2 weeks to issue the recall to do it on 7 July. So, we will find out soon.
I own ATLCL. Would be delighted if that were called too for a profit, except I don’t feel like paying the capital gains taxes.
https://www.investing.com/news/sec-filings/atlas-corp-to-redeem-notes-and-delist-preferred-shares-93CH-4023115 This is the link to the story.
OK, that confirms my understanding. Atlas is redeeming ATCOL on 7/7, not ATCO-H.
The tea leaves seem pretty inscrutable to me.
I hate when this happens. I’ve been sitting on 800 shares of ATCOprH for 9 years now with a cost basis of $15.80. To add insult to injury, it’s in a taxable account. I no longer do shipping common because the field is so volatile but one used to be able to get nice discounts on their preferreds.
Regarding the redemption status of the Atlas / Seaspan preferred shares, I’m reposting here because people seem to have forgotten there’s an III article on the topic:
+++++
https://innovativeincomeinvestor.com/atlas-corp-to-call-preferreds-and-baby-bonds/comment-page-1/#comment-160579
So, it appears they will redeem nearly 99% of the H series. That seems a little odd.
EP-C Any opinions these days on this Kinder Morgan guaranteed issue? At last trade today of 48.60 its YTM = 6.25%. Kinder Morgan comparable debt in the 1k market is offered at 4.45% YTM however, it does carry a 1 notch higher rating from S&P…. EP-C is rated NR/BB+
From most recent 10k – Capital Trust I (Trust I), is a 100%-owned business trust that as of December 31, 2024, had 4.4 million of 4.75% trust convertible preferred securities outstanding (referred to as the Trust I Preferred Securities). Trust I exists for the sole purpose of issuing preferred securities and investing the proceeds in 4.75% convertible subordinated debentures, which are due 2028. Trust I’s sole source of income is interest earned on these debentures. This interest income is used to pay distributions on the preferred securities. We provide a full and unconditional guarantee of the Trust I Preferred Securities. There are no significant restrictions from these securities on our ability to obtain funds from our subsidiaries by distribution, dividend or loan. The Trust I Preferred Securities are non-voting (except in limited circumstances), pay quarterly distributions at an annual rate of 4.75% and carry a liquidation value of $50 per security plus accrued and unpaid distributions. The Trust I Preferred Securities outstanding as of December 31, 2024 are convertible at any time prior to the close of business on March 31, 2028, at the option of the holder, into the following mixed consideration: (i) 0.7197 of a share of our Class P common stock; and (ii) $25.18 in cash without interest. We have the right to redeem these Trust I Preferred Securities at any time.
At present price of KMI, conversion value is only 44.77
2WR,
I’m interested in EP-C at lower prices.
My formula in googlesheets calculates 5.87% YTM for the 48.60 price. Maybe the difference (v. 6.25%) is ex-date related? The ex-date for the current quarter’s interest payment was June 13.
Thank you for the alert on KTN. I’m more interested in that. I think you got some recently in the low 26.50s.
I stand corrected. U B right. It should be passed x-div date already
I bought CHSCN today at $24.70 = 7.19% I’m way over weight this issue, but feel comfortable with it.
good comment CHSCN/VCLT pair went from 2 sigma cheap in september to 1.5 sigma rich in may and rolled over (3yr horizon).. currently .5 sigma cheap.. am expecting more underperformance
Same hère.
I picked up 500 shares of T-C (or TRPC), 4.75% coupon at $18.58, approximate yield of 6.35%.
CNOBP (5.25% non-cum perp junk preferred, CY 5.74%) has call date 9/1/26, after which resets to 5yy + 4.42%. At 22.85 the YTC is 13.5%, which makes it an interesting buy if you think price will rise to par.
good comment.. cnobp/sjnk pair has seen cnobp outperform since may 2023.. currently trading near 1 sigma cheap on 1yr horizon.. pull to par is a strong one given the reset am long from lower levels
BEPJ (7.25% perp IGish junior BB, call 3/25/29, CY 8.14%) is not on Tim’s list. Same coupon junior BB as BIPJ, also 2029 call and long-dated, but a different Brookfield company.
BEP – Brookfield Renewable L.P.. There’s also BEPI, BEPH – lower coupons, but about the same CY – Perpetual notes
BEPC – Corp – No K-1
Also BEP / A
BIP – Brookfield Infrastructure L.P. There’s also BIPH and BIPI – lower coupons, but about the same CY – Term dated notes (2080’s) Might as well be perpetual
Actually BIPI may be perpetual
BIPC – Corp – No K-1
Also BIP / A and / B
There must be about 100 Brookfield entities / BB’s / Preferreds
Anyone have an update on the final (partial) dividend for PRIF-F? Still have not received it after getting the redemption payout. I’m at fidelity.
I called fidelity this morning and they indicated that i would have to call the company
That’s how it goes. It’s up to the individual investor to do all the legwork. Otherwise, it won’t happen.
Depends on the broker. But you guys are wasting your time calling about a bad payment if EVERYBODY was paid incorrectly.
This security is held by thousands of accounts, and ALL of them got stiffed, and believe me, the big index funds who own this set off all kinds of alerts when a payment is not received for a listed security or is not the expected amount. (obviously, the unlisted stuff like that ancient Ocean Spray preferred from the 1930’s take forever to pay, but that security isn’t held by any mutual funds or other institutional investors.
The Ocean Spray stuff is gone. It was called a few years ago. I made a killing on it.
Justin, I recently had a preferred that was days late on paying a div so I sent a note to VG. Their response was when it’s there, it’s there.
Contact information for Priority Income Fund:
For sales: 855.330.6594
:For Operations:855.422.3223 press 5
Was referred to Prospect Capital IR : prospect capital 212 448 0702
who has not responded yet to my message.
I did get to Steven Stone directly once at the 212 number and he told me he’s the guy to speak to. Have left 2 unanswered messages since
Thanks! Doing my part by calling so they realize the problem is wide spread. I left a message with his voice mail.
Received today at Fido – .32205/share
Same here. Fido originally posted the redemption on 6/11, today they canceled and reposted it, adding the div pymt. All’s well that ends well. . . .o
That’s because they don’t care. I don’t even call anymore.
The office in Kansas is a joke. Too busy looking at their phones.
Customer service? Too much effort.
PRIF.f divy posted today (6/18) one week late Wells Fargo.
Accrued dividend from Prif-F hit my Fidelity account this afternoon
FRI at SA, by Jason Capul, editor:
Torsten Slok : “Foreign ownership of long-term U.S. Treasuries hits record high, Apollo warns”
X is a great buy here at 54.80 for the .20 b4 closing. I lifted the offer at that price. The yield is astronomical
X was a great buy 1 month ago before the price increased 34%.
Yes, but that’s assuming you knew the deal would close.
It is still in approval today.
I think you’re actually getting paid for a bit of risk on this one.
The 8-K they filed was pretty weird, because of this language:
> With those approvals, all necessary regulatory approvals for the partnership have now been received, and the partnership is expected to be finalized promptly.
Here’s what more normal language for this kind of release would sound like:
> With those approvals, all necessary regulatory approvals for the partnership have now been received, and the TRANSACTION is expected to CLOSE promptly.
They should be able to get this done pretty much immediately now, literally within days, because CFIUS approval was the only thing holding it up. What’s left to be finalized? I don’t get it.
(That’s not to say this is a bad play or anything; if it closes next Monday I’m seeing a ~20% IRR on the price you paid. It’s just… this is so strange it gives me pause and even now doesn’t read like a 100% sure thing.)
I’m always looking for knowledgeable opinions on the direction of long rates. I ran across this comment from an author who sees strong growth in the economy.
“The geopolitical risk has a higher probability of making its way into food and energy prices than it does negatively impacting US growth. This is why the week ahead is actually very consequential because if the Fed makes the mistake of confirming the cuts on the forward curve OR even being dovish as a response to the CPI print and geopolitical risk, then we could begin opening some major downside for bonds.”
Gundlach on Treasuries, Gold, Fed, AI, Private Credit, Trump
https://www.youtube.com/watch?v=98-vanEWj8E
(Warning -lots of annoying ads on YouTube – skip them. )
JMO. DYODD.
Bear,
Are you saying you aren’t enthralled by “the amazing pink salt trick?”
I do sometimes watch the ads all the way through. Was looking for imported EVOO before tariffs hit. Some doctor(?) was pitching Moroccan olive oils for their good-for-you high polyphenols (whatever those are). His product was very pricey. A few clicks came up with a new highly-rated niche brand selling at the local “Stop and Shop” grocery for a fraction of the price. A good oil, although the mild taste is the opposite of the taste I prefer. Since this is an investing site – Long Stop and Shop’s parent. JMO. DYODD.
Bear, thanks for sneaking in the ad.
An interesting, informative read about electric power generation and grids. I don’t know what to think about the grim conclusion.
https://thehonestsorcerer.substack.com/p/the-two-achilles-heels-of-complex
I was considering buying WTFCN, UMBFO or BUSEP but instead had a mental short circuit and bought a starter in BIPJ (7.25% 2084 IGish junior BB) at a CY of 8.03%. I really wanted an 8 handle. If it goes lower, I won’t be surprised. BIPJ ex-div was today.
rocks2stocks – BIPJ is my single favorite idea in playing the public infrastructure space. I am already overweight on this and usually make at least one or two buys monthly.
IMHO as a back stop, BIP is the best quality public infrastructure play you can find. They have >$50B of physical hard assets and management is on a tactical roll for instance it was just announced they are purchasing HOTWIRE.
Allocation wise BIP owns a great mix in terms of utility, midstream, data, and transport assets. And their leverage has reasonably scaled over the last decade in conjunction with tangible growth in size/scale and revenue.
Load the boat on this one. Well I’m off to the greens for the day. Looking forward cracking open a 15 year Pig Whistle today. Cheers.
I have never trusted how they treat shareholder so I avoid. Just me, I know.
tizod – I hear you. I have never had exposure to Brookfield on the equity stack side and that goes for preferreds as well and especially for any company they have acquired. Only debentures, debt etc. such as this BIPJ note.
Great info, theta. Thanks for confirming my guesses about BIP. The BIP chart looks solid. Of all the “Brookfield xxx” prefs and BBs on Tim’s master list (excluding Property Partners), BIPJ has the highest coupon by a good margin. They all have about the same CY.
I see BIPJ matures in 2084 — 59 years from now. I don’t know how old you guys are, but I’m on Medicare already and expect to have departed this life long before 2084.
My usual exit plan for bonds and other term securities is to live until they mature. May I know your exit strategy for a bond that matures 59 years from now?
My exit strategy is I die and it’s someone else’s problem. The maturity is irrelevant. It’s a fixed perpetual with an 8% CY that I think will continue to pay me until then.
Among the many possibilities for the future of rates is lower rates at the long-end without a recession. Should that happen, the price of fixed perpetuals might rise. I want to own some with high coupons.
Nibbled some PCG-A and CHSCM today. Both were down. CHSCM after going ex-dividend.
I have had good luck flipping the CHS stuff for more than the dividend.
Can someone figure this out for me? AGNCP (Series F) announced a dividend of .5826 per share but the announcement says the interest rate is 9.21915%.
9.21915% * 25 = 2.304788 / 4 = .576197.
How is the .5826 being calculated? I am certainly glad to get more than I think is coming to me so I won’t complain. I guess there is more to this calculation than I think there is.
New-
Could it be that the 9.21915% is the rate for the current period, but the dividend was calculated using the rate for the previous period? Another possibility is that the period is longer than exactly 1/4 of a year, and the issuer goes by the day count.
You nailed it. The period is 91 days.
Yep, r2s nailed it.
AGNCP prospectus, p. S-17:
Dividends payable for any dividend period during the Fixed Rate Period will be calculated on the basis of a 360-day year consisting of twelve 30-day months, and dividends payable for any dividend period during the Floating Rate Period will be calculated on the basis of a 360-day year and the number of days actually elapsed.
Pay dates:
1. upcoming div = 7/15/25.
2. prior div = 4/15/25.
Current div accrual period = 4/15 thru 7/14 … 91 days (4/15 counts as day 1).
This comment from a tweet:
“$V $MA down as $AMZN $WMT weigh issuing their own stablecoins to bypass payment processing fees.”
Is this the future? What does a credit card do? Allows me to make payments to any vendor in a convenient, safe, reliable, guaranteed manner with added benefits. The card issuer extends me credit. Would an Amazon stablecoin card work the same way? Would Amazon be a bank? There’s probably a good reason why there are so few companies like V and MA.
American Express, Visa, Discover, and Mastercard are the majors with actual networks. PULSE, NYCE, and Star specialize more in debit/ATM stuff. Stripe, Paypal, Square, etc.. are players in the online and in person payments.
Amazon and Walmart are dabbling in a crowded field of variations of all the same thing which is payments or facilitating payments. They are most likely thinking of anything that can help lower their own costs and if super lucky become popular in other places.
I know the main thing that stops me from having every single credit card, reward card, payment app on my phone, etc.. is plain fatigue of managing them all AND I if I want rewards that actually become useful I have to focus on 1-2 cards. Most people do not spend 200K per year. So a free airline ticket takes focus using a single card for example to get it any time soon or 1-2% cash back to add up to something worthwhile. Another good reason is security of these items. Finding fraud over the years must be hard if a family has to watch 15+ diff things.
fc-
I carry two credit cards: one for groceries and a Costco card for gas, Costco, restaurants and miscellaneous. Three stay at home: one for all autopay, one for all online purchases, and Amazon for Amazon.
Kind of a boring post just stating some purchases in the last two weeks/days or so.
100 more of BUSEP. I probably have 500 shares now. Also tastes of the new UMBF and WTFC preferred. Both of those kind of went up a bit too quickly and now I have to decide to add more at a higher price or not.
Added to AGM-F a bit. Added almost 200 shares of CNTHN into the ill pile.
Added 1 share of BAC.L and WFC.L to the stack to lower my cost basis in my existing holdings a bit.
Bought 10K worth of a MA muni today. A General Obligation. It was hanging out there all by itself close to 5% YTW/YTC. Pretty long duration involved with that purchase. Tax free tho!
50ish shares of VLYPN to make my holding a round lot. Slightly more to round off SYF-B.
Added 200 more shares of SGOV because it seems a reasonable thing to do today. Just let it sit.
Cash still sitting on the sidelines and nothing stands out to blow it on. I got distracted and should have dumped it all into SGOV. Worry about it later.
I looked at the chart of 6.5% cum perp preferred BPYPP expecting to see a disaster based on the extreme 11.3% CY. The price action is lively. My projection targets are low 13s with yield 13.x%. Question is, would I buy it at that level?
Just how radioactive is BPYPP?
rocks2stocks – It’s been quite a bit now since I dug deep on this one. But at the time here is why I passed on this specific issue.
Being a real estate play I think one of the more crucial metrics to look at with respect to servicing perpetuals is the debt to EBITDA ratio; which when I did, it was a staggering 15+ to 1.
But OK, let’s say you want to buy into the belief of a “recovery” premise and we are dealing with very illiquid assets etc. but cash flows etc. will turn around.
Here is the most critical part and riddle to figure out; BN has access to tap unlimited dollars but if they are not stepping in here at all for Property Partners (I’m not privy to Partners imminent debt schedule) this is one flag. Now if the Property Partners structure is solely kicking upstream to BN that is another super duper flag for me as well.
Debt traders are typically pretty savvy so when you see yields in this range, it’s really getting into gambling territory in my opinion. It may or may not work out. So the dilemma is, how much money can you really throw at something like this? Certainly an amount you can live with losing because there is a likelihood the equity side of Partners can get wiped out.
Thanks, theta. It will be interesting to watch this play out.