We made 2 purchases last week that we wanted to briefly mention.
1st off we bought a position in the new Citizens Financial Group (CFG) 6.35% fixed-to-floating preferred. The issue is a notch below investment grade, but the regional bankers with solid financials have traded relatively strong through the turmoil of the last few months. We believe the issue will move into the $25.50 area (or slightly better) in the next 30 days. This one may be sold for modest gains if they occur-but we are fine holding the issue as well. The issue is still trading on the OTC Grey market under ticker CFGLL.
The 2nd purchase we made was in the newer Algonquin Power and Utilities 6.875% fixed-to-floating rate subordinated notes (NYSE:AQNA). Algonquin is a Canadian utility focused on electricity and natural gas delivery as well as having a division which supplys water and sewage treatment. Virtually all of their operations are in the U.S. The company is a smaller utility with revenue in the $2 billion dollar area. The issue is 1 notch below investment grade at BB+ from Standard and Poors, but with a coupon of 6.875% the risk/reward proposition is pretty good.
With these purchases we move closer to be being fully invested and with moves we have written about in the past 4-6 weeks we are getting positioned in a way that is not overweight in any given area and with some coupons that are reasonably good for the quality level.