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Affiliated Managers Group Joins the Baby Bond Issuance Parade

Another investment grade baby bond is being issued by Affiliated Managers (AMG).

The company joins the issuance parade of investment grade firms selling baby bonds to lock in some nice coupons. The company is rated BBB- by S&P and Baa1 by Moodys.

The new issue will have a maturity date of 2060 with an early call in 2025.

The company may defer interest payments for up to 20 consecutive quarters without a default.

The company has 1 other baby bond outstanding as well as 1 convertible trust preferred issue which is callable now. These issues can be seen here.

The preliminary prospectus for the new issue can be read here.

mcg was on this one.

15 thoughts on “Affiliated Managers Group Joins the Baby Bond Issuance Parade”

  1. Thought I’d look at the stock itself. Oops, it’s yielding a whopping 6/10%!

    But, this bond looks interesting. Am I correct that if the bond is sold before maturity, any deferred any deferred interest is payable? Or is it just if it’s called before maturity? Haven’t owned or paid attention to individual bonds in over 20 years.


    1. RE: deferred interest on bond.

      If you sell it, you lose. The deferred payments, when and if made, will go to the then current owner of record.

      If it’s called the issuer would need to make up any missed payments but they, too, would go to current owner of record.

      That said, this deferred payment language is now standard on sub notes. It is not a major detractor for a strong issuer.

    1. On the same page here.
      AATRL, YTM ~5.9%, looks like better alternative. Remember- not suitable for taxable accounts.

        1. It’s called a contingent payment debt instrument. Major OID. In effect, you get an annual cash dividend of $2.575 this year but have to pay income taxes on income of ~$6. The difference is added to your cost basis, but it’s something you want to avoid. No problem if it’s in a retirement account. Justin is the real maven on this one.

          1. Does anyone know if brokerages actually follow all the rules on AATRL and record the OID on your 1099? They do it for traditional bonds but may not be setup to do it for an OTC trust preferred.

            1. Again, Justin is the go-to guy on this one. So if he sees this, maybe he can respond.
              But as I recall (and my memory is far from perfect), he had said that there was some confusion prior to 2018, but it was then straightened out, and brokerage reporting follows the rules since then.

        2. Trust preferred are much better in qualified accounts as 2wr and nhc state. So, too, are pref of REITS, MLPs, and partnerships, and most income oriented CEFs. The principle is put things which have no tax advantage in qualified accounts (where taxes don’t matter) and put things that are tax advantaged (QDI income, cap gains) in taxable accounts. Works for most taxpayers.

      1. Looks like this one will hold @ early price talk.
        Ticketing is complete
        Tentative expectation might be 4.75
        Will know for sure soon
        Looks like my orders went through but demand again was strong

        1. Believe 4.75 will be the price.
          Moodys has rated this one Baa1 stable and is expected to re-rate it Baa1 negative, Have no idea how this will affect the price once the offering is complete and it begins trading.

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