Well we started off with a stronger than expected employment report at 7:30- a.m. which sent stocks into a tail spin and interest rates higher. Well so much for that – stocks were flat. Interest rates have done a huge round trip from starting at 3.50%ish then going to 3.63% and now back down in the 3.50% area.
My expected losses in my accounts didn’t materalize so I couldn’t add to my Customers Bancorp FTF (CUBI-F) preferred position (price was too high). I’m determined to pay only $25 for these as they are currently redeemable–they are now trading at $25.25–no thank you. I did go ahead and add to my Customers Bancorp 5.375% baby bond position (CUBB)–current yield of 6.54% with a yield to 1st call of 8.92%.
So we head into the weekend folks may still be looking for the highest quality issues with the best current yield or yield to 1st call–so here is another Google Sheet which is just an alphabetical listing with the ‘Investment Grade’ sorting tab—1 click and all the investment grade issues appear. This sheet is downloadable by users.
Bought the mid cap bank preferred ASB-F. paying 6.5% at the moment.
I have done well with the common as well – Tim I believe these guys are from your neck of the woods. OK, Wisconsin 🙂
Tim, looking at the spreed sheet and comparing to bonds. I don’t think we are quite there yet, but bonds I have been looking at are starting to look close to the same returns and bonds have fixed call dates where a lot of the preferred have first call, but listed as perpetual.
When the market is open, I want to be more active using Fidelity’s bond search tool.
So far I have a broad enough mix of BB and preferred that I have been up more days then down.
Charles–yes you should use there bond search tools–only in the last year have I done so and bought decent stuff in the 5 to 5.5% area—pretty short maturity stuff (usually maturing in 3 years or less). Just a decent hiding place for a short time.
Tim – Apologies, but I just can’t help myself: When you’ve used the Fidelity search tools and bot “decent stuff in the 5% to 5.50% area,” what do you mean? I suspect you’re talking about the 5% to 5.50% YTM area, right? That’s how they list bonds in their search tools, right? So how come when you mentioned you recently added to CUBB you mentioned current yield and a huge yield to first call but didn’t even mention yield to maturity??? That’s a bond too, just like what you see in Fidelity bond search tools…..
Charles – any must own bond ideas from you right now? I bond some US Cellular bonds the other day. Those are a bit further down the ladder but I am 42 and they are small starter position.
Would appreciate so must own ideas from you.
Thank you
Hello SJC,
I’m almost 25yrs older than you and so we have different needs in what we are looking for in bonds. Been a lot of discussion back and forth with people here and on SA.
Prices have been moving up and I have reined in my horse who’s chomping at the bit. Hoping we get another move down in the market. What I have observed over the years is the market is moved by emotions a lot of times. Everyone talks about AI trading, guess who wrote the programs.
PM me over on SA. I might have one or two. But again its up to you to make the decision if its right for you
Charles, KTN has a seller out at $27.47 I see. Very few shares traded off that ask, so I dont know how many are there. But it matures 1/1/27 and stripped out being it goes 6 months interest exD end of month that makes a ~6.35% YTM for 4 year trust debt BBB rated paper if that appeals any. I bought a bunch on a recent selloff below $27 so its my biggest position for now. I know nothing, more than anyone else, but my heavy lean is shorter duration solid quality debt paired with live high yield Libor floating issues.
Tim, I know you and several others buy the CUBI preferreds and Bond. I own the F shares. How good is their credit quality? I see they are not rated, but many times companies don’t want to spend the money. Thinking of adding the bond, but I try to stick with on IG.
Thanks for your opinion or anybody else that has some knowledge of this bank. Jeff
What do you think of TRTX / SI Prefs at these levels?
daniel–I prefer the Arbor Realty and Ready Capital issues. I do have a tiny amount of the KREF-A issue. These have been painful–but in small quanity the TRTX issue is probably a decent buy–9.48% yield.
thanks tim. I actually sold my KREF to buy TRTX A
TRTX should distribute $0.39 by the yr end. so $16.50 – 0.39 = $16.11 $1.5625 div = 9.7% dividend
KREF ex date already passed. $17.55 $1.625 div = 9.26%
TRTX issue is $201,250,000 against $1,105,000,000 in book value. So covered about 5x
KREF issue is $327,750,000 against $1,267,000,000 in book value. So covered about 4x
Am I looking at it right that TRTX is a better? I know TRTX is below book value right now and thats probably why the yield is higher?
I want to compare ABR / RC issues – should I look at the same metrics?
If it’s any comfort, I own a fair share of TRTX preferred. I feel they have a fairly good protfolio of loans, with the exception of a couple office properties which they are working through. Also strong believer in ABR.