Interest rates have fallen a tiny amount this morning and are now trading just under 4.30%.
Preferreds and baby bonds are moving somewhat higher–not bunches but but enough to moves our accounts to new highs–although June 30th is a huge dividend and interest payment date for our holdings so things should jump nicely that day.
We seem to have some kind of calmness in the middle east–I think–one never can tell as it depends on what channel one watches on the boob tube, but at least the saber rattling seems to be toned down somewhat.
Still haven’t made my weekly buy, but certainly will do so any minute. Mr Conservative tossed out the Corebridge Financial 6.375% baby bonds (CRBD) as a possible buy that would fit me–Corebridge is an insurance and annuity company and most recently has performed well. The biggest segment of their net income is off the annuity business where they profit from the spread between what they pay out and how much income they garner from investments–sometimes this can be a feast or famine proposition, but most investors realize that is the case. The biggest problem I have with Corebridge is that investors can sour on annuity companies – i.e. Brighthouse Financial (BHF) . CRBD certainly has a tasty current yield at just over 7%–and is investment grade. We’ll see.
Well let’s see how the afternoon goes–if markets can hold their gains and if the middle east can stay at least semi calm.
Tim, not only can an annuity company get squeezed on the margin they make between what they earn on investments and pay out they can lose customers.
I happen to be one with BHF and have been procrastinating on if I should move all or part of my money out of them and into the market or CD’s
Today’s announcement made up my mind.
Charles, Today’s announcement suggests that BHF may not sell itself and stay independent if the final offers are not adequate. This would be a boon for the preferreds by eliminating the delisting discount, don’t you think? Today’s pfd drop seems an overreaction.
Tom, Might be worth the risk to do a quick flip. But then again the market is saying something. Note, even with yesterday’s drop they still didn’t hit their April low.
Retired,
What is the diff between the high rate and the investment rate? Do you earn the investment rate?
I always assumed the high rate was what was earned.
lt,
There is a footnote 2, next to the “Investment rate”. Footnote 2 says “Equivalent coupon-issue yield.” which assumes an annualized yield.
Here is the math.
Purchase price = $99.484333 (par value $100 upon maturity)
Interest earned during the 42 days (6 weeks) = $0.515667
Coupon Yield = ($0.515667/$99.484333) x (365 days per year/42 days) = 4.505% which is quoted on the pdf document that I linked above.
The 6-week Tbill rate went up to 4.5% this morning. I put an order late last night since I’ve some extra cash. Not a great rate but would like to keep some dry powder knowing that I’ll get the principal back plus interest.
https://www.treasurydirect.gov/instit/annceresult/press/preanre/2025/R_20250624_1.pdf
I’m guessing the Aug maturity date spike in yield has something to do with our politicians inability to balance and pass the budget on time.