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Affiliated Managers Announces New Baby Bond

Asset manager Affiliated Managers (AMG) has announced a new issue of baby bonds.

The terms are fairly typical, but the notes will have the ability to defer interest payments on one or more periods for up to 20 quarters without a default being declared.

This issue should be investment grade (BBB-/Baa1)

AMG has 3 baby bonds outstanding as well as a trust convertible which can be seen here.

The preliminary prospectus is here.

Thanks to J for being on top of this one.

9 thoughts on “Affiliated Managers Announces New Baby Bond”

    1. If you Prefer:

      For me, MGR has been a tremendous name – just a cash cow. I already booked large realized gains on it in 2024, and also had some in 2023.

      I wrote this back on 2/12/24 when MGR was trading at $24.60:

      “On a different note, just finished up selling my MGR at a sub 6% yield. Many of our dearly beloved preferred and baby bond holdings are trading near full prices again.”

      Seriously hoping MGR sells off more on this news so I can reload on the position near a 6.75 – 7% yield. If the 6.75% talk is correct for the new baby bond, the 4.2% MGRD looks way overvalued now (matures in 2061) near a 6% yield. That security should be trading closer to $15.

      Of course the big, dumb $15B ETF PFF owns all three of the AMG babies, so they don’t care what price they pay when they get inflows ($400M in inflows already in 2024!).

    1. Issuer Affiliated Managers Group, Inc. (NYSE: AMG)
      Description 40NC5 Fixed-For-Life Junior Subordinated Preferred Notes
      Expected Ratings* Baa1 / BBB- (Moody’s / S&P)
      Format SEC Registered
      Maturity 3/30/2064
      Offering Price $25.00
      Announced Size $200m (8m $25 par securities)
      Revised: 6.75%
      IPTs 7.000%-7.125%
      Coupon Structure Fixed-For-Life, payable quarterly
      Payment Dates Quarterly in arrears on the 30th of March, June, September and December commencing on 6/30/2024
      Optional Deferral The Issuer has the right on one or more occasions to defer the payment of interest on the notes for up to five consecutive years
      Redemption: Callable at the Issuer’s option:-In whole or in part, on one or more occasions, on or after 3/30/2029 at 100%-In whole, but not in part, before 3/30/2029 upon a “rating agency event” at 102%-In whole, but not in part, before 3/30/2029 upon a “tax event” at 100%(See the preliminary prospectus supplement for details)
      Use of Proceeds For general corporate purposes, which may include the repayment or refinancing of indebtedness, share repurchases, and investments in new and existing investment management firms
      DRD/QDI Eligible No
      Expected Listing NYSE
      Joint Bookrunners BofA (Physical), MS, RBC, WFS
      Settlement T+4 (3/20/2024)
      Sales into Canada Yes- Exemption
      CUSIP / ISIN 008252827 / US0082528276

      1. Interesting – Schwab shows that issue (cusip) at 7.0%. Probably a typo but will try to call their bond line to clarify and see if it can be purchased.

  1. Sold MGR. 6.3% profit for 3 1/2 months.

    I have no idea what the coupon of the new issue will be. But my assumption is it will be more than 5.875%

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