mREIT AGNC Investment (AGNC) has priced their new fixed rate reset preferred.
The issue prices at 7.75% for 6 million shares. The coupon will remain fixed until 10/15/2027 at which point it will ‘reset’ to the 5 year treasury plus a fixed spread of 4.39%. There after the coupon will reset every 5 years.
The pricing term sheet can be found here.
Perm Symbol AGCGL.
Trading down today. Bot 22.40
From Santa Fe Starbucks. Learning to travel and manage wherever.
Bought sagood amount at 22.20. The CWMF effect is oversold.
Joel,
The proposed perm symbol is AGNCL.
I think AGCGL may be just the new temp symbol.
ETrade now allows trading of AGCGL. I picked up some at 24.30
I did have to pay the $4.95 commission.
Trading at $22.30 – 8.69% yield
Is anyone a Colorado subscriber over at SA? I am not sure if this is impolite but why does he consider this issue so absurd for the pricing of it? This is the blurb I can see for now below. I am not asking for a full cut and paste of his subscriber article. Just a one sentence summary of what he thinks went goofy with this issue.
“AGNCL (AGNCL) is the upcoming preferred share from AGNC (AGNC). It is the most remarkable new offering in years for the sheer absurdity of the pricing. AGNC is taking advantage of the underwriters. By my estimate, underwriters are set to overpay by more than $13 million. Someone at AGNC deserves …”
fc, Colorado Wealth’s intro summary, a bit hyperbolic me thinks, is largely based on a comparative to the mispriced AGNCM issue. Closing at $21.40 on September 7th, it’s current yield at the time was 8.03%. This was in sharp contrast to similar issues from AGNC and NLY that had yields (roughly) between 7.10% and 7.25% on that date. Assuming AGCNM is called in 2024, its Yield to Call would be a hefty 39% vs ANGCL (purchased at $25 / called in 2027) YC of 31%. Of course, the gamble is that AGNCM will not float … but if it did, at current LIBOR, its yield would be 7.5%. Where inflation is 19 months out is anyone’s guess–as would be its trading price. I’m anchored in at $23.83 and am quite happy with an 8%+ yield. And too, I prefer a Treasury benchmark vs the AGNCM LIBOR marker.
Richie – If a quarterly pay 6.875% issue trading today at 21.40 is called on 4/15/24, it’s yield to call is 17.46%. And no matter how you slice it, if a 7.75% issue purchased at par is called on any day in any year, it’s yield to call will have been 7.75%, ignoring accrued for purposes of simplification in both examples.
2whiteroses, well, I’m embarrassed! You’re correct, of course, since as I was using yield (percentages) at issue and not the annual dollar dividend. This is what happens when you’re wife is beating you over the head yelling “were late, we’re late!”
Faux pas aside, the foundation of the Colorado Wealth call was/is the comparatively odd trading price of AGNCM.
I will now slink back into the shadows ….
Richie,
Don’t slink away!! LOL.
Faux pas aside, I still don’t understand why Colorado was so euphoric about the new 7.75% issue by AGNC.
It does reset, but only once every 5 years, while the 3M-LIBOR preferreds, like AGNCM, reset every quarter. So the 3M-LIBORS, which will be replaced by 3M-SOFR, is much more responsive to inflation changes in the future. What am I missing that makes Colorado so pleased with the new issue? Thank you.
Bill, he is not euphoric about the new preferred and shows that in several detailed examples with many comparisons, charts, and scenarios marked out on why. If you read the title of the article but not the article itself, then that would explain it.
Richie – no need to feel that way….I was more interested in making sure the wrong impression wasn’t inadvertently made…. I’ve actually been told I make mistakes every now and then too. As the joke goes, those people are wrong, but nevertheless….. lol
AGNCL not worth anywhere near par compared to where their other issues are trading. Mostly because of the low floating rate, and the others float high sooner unless rates collapse again. Also I think he overrates upside to par from low priced issues which may increase his distaste for the new one. I’m not a subscriber but I read all of his public articles.
I am replying to myself. I am reading this right now but it appears Colorado did I (us) a solid and released the info. I am pretty sure this is an article summarizing the events…
https://seekingalpha.com/article/4540541-yield-chasers-wrecked?source=all_articles_title
I used to subscribe to his services during the covid crash and I think he is pretty darn good.
Replying to myself again. After reading that I understand what he meant now. I was not to thrilled, on a gut level, what this new preferred was offering but I did not really realize why. I was comparing it to what was available today already trading like ABR-D. I should have compared it to their other preferred but I was too lazy to do the analysis.
In the end it appears I would not buy this new preferred unless I could pay 22.75 – 22.90. If I cannot get that AGNCM at 22 even would be preferable.
I read CWMF’s public stuff and usually agree with most of his analysis. I don’t necessarily agree with him on this one. But it comes down to different perspectives and goals.
First he is giving more credence to issues that float sooner (but who knows what rates will be in 2 years).
Second, he is counting on the upside to par from lower priced issues AGNC
Third, he is ignoring the higher 5 year fixed rate of AGNCL
I think if you are trading this and looking for short term swings, CWMF’s analysis makes a lot of sense (as he has a shorter term trading focus). If you are buying and holding for income, I don’t believe it does depending on your entry point.
In any case, I have established a position in AGNCL for the long term. – replacing some lower yielding or more risky Mreit issues I had held. Yeah my initial buy was too early based on how its played out but that’s why I started small and built the position in multiple steps. At it’s closing price today hard to pass up an 8.46% annual yield for one of the 2 least risky mreits out there
AGNCL is bad compared to their other issues. Doesn’t mean it’s a bad buy just that it isn’t the best choice .The 4th best choice could work out if AGNC remains a good REIT. Especially now with the price drop which may be partially due to his article. Not a pure hit piece it has too much analysis for that but it could have the same effect if he is off target. Probably a buy at 22.90 wher he said it closed though I couldn’t see prices Monday because of the symbol change.
I’ve always thought he overrates upside to par, as if everything eventually recovers. Floating rates are indeed significant, It’s true we don’t know what future rates will be so it’s about playing the odds or playing the avrerages can’t just ignore them. I said several days ago this was a bad deal for some of the same reasons but never expected this much carnage.
Maverick, regarding “… he is ignoring the higher 5 year fixed rate of AGNCL”:
It’s a nit, but 5Y Treas is only 18bps higher than 3ML, not a substantial difference imho:
– 5Y Treas = 3.425% (per https://www.marketwatch.com/investing/bond/tmubmusd05y)
– 3M Libor = 3.24543% (per https://www.marketwatch.com/investing/interestrate/liborusd3m)
Of course, who knows where 5Y Treas will be in 5 years, or where the 3ML benchmark will land when it converts to SOFR…
fc- Colorado’s article is now public on SA; link:
https://seekingalpha.com/article/4540541-yield-chasers-wrecked
It looks like the market agrees with his argument as the price of this issue dropped apprecciably.
Yes. I saw that article last night. I pulled the trigger on 400 shares at 22.18 just now. A total pain in the rear calling Ally and having to explain everything to get an override trade put in. The website said invalid symbol. I already own a few mreits of similar amounts and I think I have enough of this sector. The previous were all bought at covid crushed lows and I just hang onto them. I need to start prepping for purchases of a much higher quality so I can sleep sound at night.
Well FC, I joined the rest of the crew here in the lifeboat. I commented that either AGCGV (symbol at the time ) would move higher and pull the older preferred up with it in price or this would sink lower and it was possible it would sink lower in price and maybe so would the older preferred. My thought was John Q public would look more at the price then the yield.
Turns out older preferred like AGNGM did drop but AGCGL followed it with a bigger drop. I .didn’t catch the low of the day, I was in at 22.18 now see what tomorrow brings. I may be stuck with it for a while. Hopefully as the first divy rolls around it will go up in value.
I liken CWM to more of Martin G’s style. He compares existing issues within the family and computes prices. CWM wrote an article to subscribers on 9/8 stating that this new issue would not be equivalent to the other issues unless it dropped considerably, in which it did drop from par $3. He compared it to the other issues. He has also sent a handful of other alerts to trade between some of the other issues as this group has been having some volatility between them. Also he would not be a buyer unless it dropped even lower to “get a deal.” He is also not a buyer as the volume traded is pretty low and only a fraction of the 6 mil offered. What if the existing holders decide to cut their losses as they are already sitting on a considerable loss already and who knows what timeline they need to recover their investment, especially if they used borrowed money. Sit on the sidelines and see what the group as a whole does.
Mr. C What you got from CWM’s article expressed my unsaid thoughts exactly. See what today brings. I probably should of listened to my own thoughts about this issue. Comes from raising Sheep I guess. I give them credit for being halfway smart, but when they panic they run blindly from any perceived trouble. Investors who are sitting on a unrealized loss may do the same.
Hopefully the market recovers or the losses slow down.
Just did something even crazier yesterday too. Bought a couple hundred shares of CORN
I don’t understand selling it to cut losses here, the company isn’t failing it was just a mispricing that got corrected. The underwriters still have a lot of shares to sell into low demand. What sometimes happens is the price creeps back up only after they finish dumping their shares. That’s when I’ll look to swap between AGNCN issues, until then I’m holding onto the new one in case it’s now a bit underpriced relative to the others.
Agreed Martin. I admittedly was too early with my initial buy but I had went in small planning to buy in tranches which is what I did. I can’t imagine anyone other than a very short term trader selling it here to cut their losses. In fact I made another add right near the close yesterday at 22.05.
Two points – first this isn’t even trading under its permanent ticker yet – and not everyone out there (non III folks) buy these new issues early OTC / on the Pink sheets. Second, while I do have some philosophical issue which I mentioned earlier with CWMF’s analysis, using his methodology the current AGCGL price puts this in the same relative value now as AGNCM he was touting instead (actually was undervalued at yesterday’s close)
So, I could use some wisdom from people who have worked a trading desk. If the underwriters bought at a 3.15% discount, then it is my novice understanding that they bought at (1 – 0.0315)*$25 = $24.21, and they will try to sell the 6M shares at over $24.21 to make a profit. This seems to be a fairly successful strategy for most preferred IPOs. If this new AGNC preferred is trading in the mid-$23s and over 400k shares have traded today, are the underwriters taking a loss? Are these sellers that bought high yesterday and decided to take the tax loss? This seems to be a departure from the norm for preferred IPOs, and I’m just trying to understand the thought process. Thanks in advance.
It hit under 23.50 yesterday. Yes it’s a loss for anyone who sold.
I’ve always considered McReits ‘special handling’….. In other words for yield hogs only. Prepare to get burned. In the short run anyway. So a 7.75 now with a current yield of what 9%. What’s the yield telling you?
Well, last year the yield would have told me a lot, but the current yield of AGNCL is now 8.24% (7.75% *25.0)/23.5, not 9%. I track over 230 preferreds, and nearly 60 of them have current yields above 8.24%, including mREITs, finance, and capital markets (RITM, NLY, NYMT, FBRT, ACR), shippers (CMRE, TRTN, DLNG, etc.), insurers (ARGO, SPNT, AHL, ), energy (VIASP), and industrial (WCC, ET, NS). None are investment grade, but thinking about the comments on this website, most of the people here own some of these preferreds, including me. But, ownership of the preferred wasn’t my question. I simply asked if the underwriters are selling at a loss. A follow up question would be that if they are selling at a loss, why did they buy it in the first place? Surely they have better access to data from which they could estimate prices, which they would then use to negotiate a discount. After watching preferreds tank all year long, price drops no longer surprise me. I’m just confused about the underwriters. Did they blow their price points? Did they dump too many shares too fast? Something seems different from most of the IPOs in the last couple years, and I’m just looking for insight.
The underwriter of the preferred, i think underwriter is the correct term, does not look at the sale as a success or failure if they sold every single share above their cost. Their goal is to make money obviously and sell everything as quickly as possible so that cash can be reused again for another purpose.
So without knowing how many shares sold at each price one cannot determine anything. For all we know the prices paid by people below 24.21 might only represent 15% of the total amount of shares while the sheer majority sold above.
So with that said.. maybe the underwriter realized things were getting weaker as time went on decided to aggressively sell the remaining just to be done with it knowing it will hurt their average sale price per share but indeed made a profit. On top of that they might need the cash next week for something else. With that said, yes, they can royally screw things up and take a loss. That is possible.
The question I always had in my mind is why successful companies that are quite large and trusted even bother with underwriters. One would think they have the right people in place to possibly swing it and keep it all for themselves. But this could simply be me showing my lack of knowledge.
A couple of side points – an investment banking firm’s commitment to underwrite an issue is made by different people than those who are then given the task of pricing and marketing it… They have bankers who invest a great deal of time and effort to be named the underwriter. The managing underwriters also have a syndicate of co-underwriters each of which may have their own opinions of the issuer and, therefore somewhat different approaches as to what they should do with their allotments should they not be immediately successful in marketing to clients… In general, a goal for a successful underwriting is to price a deal that immediately goes to a slight premium. Then everyone’s happy, the client, the investment bankers and the buyers. This is especially the intended pattern with a frequent issuer of securities because they know they will be coming back to the well so need to have the underwriting successful in everyone’s eyes.. However, occasionally there’s a hard nosed client who wants to squeeze every penny out of the issuance and demands a tighter pricing… That could cause a deal to sour quickly. You must also keep in mind how the environmant has changed for issuers of fixed rate securities… It is much more difficult to pre-read your buyers en masse when rates are going up than when they’re going down, of course… So mistakes could occur on pricing, but it doesn’t happen often…. Don’t forget almost all deals have a clause allowing the underwriters to puchase at their option an additional amount of shares up to 15 % of the issue’s size as well. That alone is another incentive for deals to be priced right.. So there’s a few reasons why most deals end up being worth a slight premium upon closing but also reasons why they sometimes, not frequently, end up being unsuccessful, i.e. unprofitable for the underwriters. BTW, this is based on watching the process from the inside as it was over 25 years ago and in the municipal area only. Maybe someone else can update the process as it is today.
2WR, I have been reading the prospectus of some of these floaters and have noticed something. AGNCP for example
Morgan Stanley, BOA, J.P.M, UBS as the Joint Book runners along with co managers CITI and CREDIT Swiss
On another older floater, I saw B. Riley and Lehman Bros
So the quality of the Preferred at time of issue seems to stand along with the underwriters?
Charles – I’m not completely sure of your meaning but if you’re suggesting a buyer might be able to gain some perspective about the quality of the issuer by looking at who their investment banker/underwriters are, I would say there’s some truth to that. It’s not tried and true, but in general, there are companies wishing to come to market that the staid old investment bankers will pass on the opportunity to underwrite. Those companies will most likely find willing investment banker/underwriter from another tier. So in a very broad sense there is something to be garnered from knowing who the original managing underwriters are going to be… As said though, this is merely a rule of thumb, not a given… Sometimes just the mere size or lack thereof of an issue or the company’s foreseeable future prospects that could be enough for a first tier banker to pass. And sometimes underwriters are chosen by companies because of the underwriters excellent reputations as specialist in their particular field. Perhaps this is nothing more than a biased opinion on my part based on my observation over 20 years working on the trading desk (not directly on the syndicate/underwriting side) of a small but well respected old “white shoe” (https://www.merriam-webster.com/dictionary/white-shoe) “bulge bracket” (https://www.investopedia.com/terms/b/bulgebracket.asp) investment banking firm by the name of Dillon Read 26 years ago
My understanding of the underwriting process using AGNCL as an example is as follows:
– In an IPO, new shares are NOT purchased at a discount from the company by the underwriters.
– Customers of the participating broker dealers will place indications of interest (IOI) for the deal.
– Customers will be allocated shares of the deal at the deal price ($25) pro rata based on the demand for the issue.
– Broker dealers will take a pre established commission or concession
(3.15% or .7875 p/s) on the shares they allocated from the company.
– The lead underwriter/bookrunner in the case of AGNCL has oversold the deal and is short 900,000 shares (the over allotment)
– The Company has granted the underwriters an option for 30 days to purchase up to an additional 900,000 shares
– If the deal trades above $25 over the next 30 days the book runner will at some point exercise the right to buy the 900,000 shares back from the company to cover short.
– If the deal trades lower the book runner will buy stock at $25 and or lower in the free market to cover short and/or support the stock.
So EB, It’s possible when this starts trading that the Underwriters step in and buy to support the stock price? Its also possible this didn’t go into an over allotment? Considering buyers and holders here as a cross section of the market, people have been discussing how many preferred have dropped in stock price and are offering similar yields. A lot of options on the table to place your bets.
EB- I don’t understand why you say the underwriters do not purchase the shares at a designated discount to par. You’ll always see the amount the company receives in the Use of Proceeds section and it will always match the announced percentage discount agreed upon by underwriter and issuer… The underwriting firm itself will not end up receiving the full amount as there are selling commissions to be paid both at their own firm and possibly at others who bring in customers, but most definitely, the shares are bot at a discount by the underwriters. And of course there’s always underwriter flexibility on allotments should some members of the syndicate be able to sell the shares and others are not.. lots of behind the scenes maneuvering going on to help make the deal a success or at least a success for the book running manager..
2WR – You are correct. I’m mistaken. I have always viewed the process as one in which the underwriters are paid 3.15% to simply act as “conduits” of shares from company to customer, when in fact, per page 33 below…”each underwriter named below has severally agreed to purchase, and we have agreed to sell to that underwriter, the number of depositary shares set forth opposite the underwriter’s name.”
https://www.sec.gov/Archives/edgar/data/1423689/000142368922000052/finalprosupp-prefg.htm
EB and 2WR:
10+ years ago before I retired from the corporate world, I worked in a REIT buyside shop that had a long-only business and a hedge fund. We employed a full time trader.
This is the way it would have worked for AGNCL (or any REIT doing a common or preferred secondary):
At approximately 1:05PM PST after the market close, the phone at the trader’s desk would ring with traders representing investment banks (underwriters) asking us if we wanted to buy newly-issued AGNCL at $25/share (or a REIT common at a 1-3% discount to the closing price.) Preferreds were never offered below $25.
We would say yes or no. If we bought, we would be subject to the risk of whatever price the security opened at the next day. We almost never got our fully requested amount to buy. Like I said, preferreds were never offered below $25 par value, but REIT commons were always offered at a small discount.
Back then, the investment banks doing business in the REIT sector almost always got everything sold and allocated before the next day’s market open. They never really had any price risk.
Not sure if things have changed since then as everything happens faster these days.
Rob – Are you purposely talking about a secondary offering which AGNCL is not? Though I’m not as familiar with how secondaries are handled, I’m pretty sure they may not follow the exact same pricing and syndication procedures/strategies as a primary from the managing underwriters point of view… I sure couldn’t outline the differences though.. I would say, though, that a primary is not prone to an on your mark, get set GET ON THE PHONE starter time… All those phone calls from salesmen/traders you got that began at 1:05PM would have been made long before the issue was officially priced so the feedback could be incorporated into the pricing model. Are you saying the 1:05 time coincided with the pricing?
2WR:
“I would say, though, that a primary is not prone to an on your mark, get set GET ON THE PHONE starter time… All those phone calls from salesmen/traders you got that began at 1:05PM would have been made long before the issue was officially priced so the feedback could be incorporated into the pricing model. Are you saying the 1:05 time coincided with the pricing?”
“Primary” preferred offerings were often subject to the same 1:05pm shotgun start as REIT common secondaries. You either paid $25 or the salesman moved on to the next potential customer. Never a discount.
Of course, REIT common IPOs were handled by the long-term process you mentioned. I remember the Douglas Emmett (DEI) IPO quite well…it was offered at $21 via a long road show back in late 2006. Today, the stock is back to its original IPO price! 16 years of nothing but dividends for that one. Wow.
But I have no answer as to why AGNCL (or whatever the temp symbol is now) has been so weak. But my guess is that every institutional investment firm that bought it did in fact pay $25/share and none of the investment banks lost money on it.
AGNCL doesn’t pay its first dividend until 1/15/23, so my guess is that it will bounce back heading into the new year.
Thanks Rob–I corrected that to the correct year.
Goin2cali, agreed. I was taken aback at the opening of OTC trading on day two especially. Unpredictable (at least to me) and not in keeping with similar, higher quality issues trading from AGNC and NLY. There are approximately 41 mREITS with NLY, STWD, AGNC and BXMT the largest in cap. These hybrid securities should and do trade, on average, stronger than their lower ranking cousins. (See current yields below.) Mortgage REITS are well understood and, based solely on history and company strength, AGCGV (AGNCL) is an oddball — it should be trading at or near $25. Full disclosure: I’m in at $24.00 and $23.50.
NLY/PF … Yield: 7.14% Last: $24.42 10D Vol: 127,722 Range: 22.01 – 25.92
AGNCP … Yield: 7.21% Last: $21.40 10D Vol: 49,451 Range: 19.73 – 25.71
AGNCO … Yield: 7.22% Last: $22.44 10D Vol: 51,824 Range: 20.63 – 26.57
NLY/PG … Yield: 7.22% Last: $22.39 10D Vol: 27,216 Range: 19.56 – 25.86
NLY/PI … Yield: 7.25% Last: $23.44 10D Vol: 37,250 Range: 21.32 – 26.69
ABR/PF … Yield 7.60% Last: $20.70 10D Vol: 6,731 Range: 19.75 – 25.58
ABR/PD … Yield: 7.76% Last: $20.59 10D Vol: 4,906 Range: 19.70 – 25.80
AGNCM … Yield: 7.77% Last: $22.04 10D Vol: 26,551 Range: 19.81 – 26.11
ABR/PE … Yield: 7.78% Last: $20.20 10D Vol: 2,465 Range: 19.40 – 25.69
AGCGV … Yield: 8.24% Last: $23.50
RITM/PC … Yield: 8.43% Last: $19.03 10D Vol: 31,126 Range: 18.68 – 23.92
RITM/PD … Yield: 8.43% Last: $20.79 10D Vol: 47,070 Range: 20.45 – 25.64
NYMTL … Yield: 8.43% Last: $20.45 10D Vol: 11,698 Range: 19.46 – 25.54
RITM/PB … Yield: 8.58% Last: $20.58 10D Vol: 24,773 Range: 20.01 – 25.78
RITM/PA … Yield: 8.69% Last: $21.60 10D Vol: 19,806 Range: 21.04 – 26.12
PMT/PB … Yield: 8.71% Last: $23.07 10D Vol: 9,357 Range: 21.31 – 27.07
PMT/PA … Yield 8.86% Last: $23.20 10D Vol: 6,337 Range: 20.81 – 27.03
PMT/PC … Yield: 9.03% Last: $18.70 10D Vol: 38,686 Range: 18.07 – 26.20
NYMTM … Yield: 9.13% Last: $21.79 10D Vol: 21,240 Range: 20.12 – 25.98
NYMTZ … Yield: 9.19% Last: $19.15 10D Vol: 6,795 Range 18.43 – 25.01
CIM/PA … Yield: 9.40% Last: $21.30 10D Vol: 13,547 Range: 20.38 – 26.00
CIM/PB … Yield: 9.48% Last: $21.49 10D Vol: 23,159 Range: 20.34 – 26.39
CIM/PD … Yield: 9.76% Last: $20.61 10D Vol: 27,346 Range: 19.34 – 26.39
CIM/PC … Yield: 9.81% Last: $19.90 10D Vol: 22,118 Range: 19.29 – 26.52
NYMTN … Yield: 9.93% Last: $20.50 10D Vol: 16,110 Range: 19.78 – 26.75
Good things to ponder. Thank you all.
Goin@cali I can speak only from my one experience with a big broker Dean Witter. I was offered a opportunity to buy shares of I think it was West Air which at the time had a contract with United Express to run shuttle service to United hubs. I got cold feet and backed out. The salesman was upset and told me I could only back out if he found someone to take my place. Just luck I did as they lost the United contact and went bankrupt about a yr. later.
So where is this going, Maybe the big underwriters don’t have enough in house clients that signed up at 25.00 a share or even have some backing out. There could be a concern that as soon as this starts trading that existing holders decide to take a loss and sell the stock.
I think a little depends on what the market does in the coming weeks and what the other outstanding preferred of AGNC does
Win a few, lose a few. I imagine they have no problem taking a few losses because they make money on most of their issues. Quick turnaround seems to be a priority, to keep the money recycling or to avoid a bigger loss. Always seemed to me they sell too fast when they could get better prices by selling slower, but they have other priorities too.
My experience may be dated, but for those interested…here is how a preferred offering was handled when I was a broker at Merrill:
We would receive a fact sheet on any new offering. If I thought it was suitable for clients, I would get on the phone , tell Mr. client that we had an offering at $25 from company X with an expected yield of Y. I emphasize expected yield because we really did not know what final pricing would be. Whenever the allotment at our firm was reached, we could no longer enter any orders. All orders entered up until that time were always filled in their entirety. Brokers had to hurry as most issues sold out within a day or two…sometimes in hours. It was my understanding that the firm always made the underwriting discount as profit on those shares. The only way the firm could lose money is on shares that remained unsold or if the firm decided to hold shares for its own account.
I noticed that yesterday’s Schwab trades changed to “when issued”, with no settlement date, and a $0 amount. If that’s really true, maybe it explains the trading weirdness.
Anyway, if you bought at Schwab yesterday, make sure you don’t overspend your account balance.
David- I noticed the same after buying at Fidelity.
I got order filled at Schwab for $23.60
Will someone else with a TD account call and help me let them know what a bunch of crap services their brokerage is fullfilling?
Quoted, Bid, Ask, shows a full screen and NO opening orders? Even spoke to a supposed broker.
Alan Parson’s quote, “Just when I need you , You won’t be there…”
I’m on the road and at a laptop and this is a strong weight to now begin migrating away from TD.
Joel,
I am with TD and it wouldn’t accept any of my bids around the 23.50 mark. I tried day, day plus extd., Good until called I varied the shares nothing. This is even after it showed like a 50,000 share sale at 23.50 Or was it 23.54
That was around 6:30 today. Guess the market makers don’t want to go that low for a couple hundred
Joel,
Tried again at end of day with TD to do a setup for Monday. Just stubborn I guess, don’t want to pay asking price at 23.50. I put in an offer @ 23.25 and it was rejected. My feeling are hurt.
If you look at it from Colorado’s Wealth management point of view.
https://seekingalpha.com/article/4539891-free-income-upgrade-for-dividend-investors
If you take the short term view, Which I was thinking about last night. With the other 3 AGNC preferred in the 21 to 22 dollar range why pay 24.00 for the new issue?
At 23.99 it’s paying > 8% interest.
Just noticed agncn also floats to > 8 % in October and will be callable. So yeah not a lot of difference.
AGNC should have issued a term pref (baby bond) in 7 -7.25 area and would likely have raised sufficient capital to refund entire AGNCN issue. Tough environment to issue open ended perpetual…imo
On a semi-related note – Annaly Capital Management, Inc. Announces 3rd Quarter 2022 Common Stock Dividend and Reverse Stock Split
https://www.annaly.com/investors/news/press-releases/2022/09-08-2022-211604698
I would read Trapping Values article from Sept 4th.
Showing down .50 after hours
That’s disappointing after market pricing. But the funny thing is most McReits have fared much better then more traditional names! Will see
AGNCM rose 3.3% today to $22.11 – likely from holders selling it to pick up this “L” issue.
Makes sense as I hold “M” at 8.25% but would happily exchange them for “L” at 8%+ for the 3 additional years (“M” call at ’24; “L” reset at ’27), as I have no idea what the 3-mo will be in ’24 (“M”) nor the 5-yr in ’27 (“L”). Plus the risk of call for “M” in ’24.
Research AGNC’s other existing issues. Some steep and discounted relative values. It’s really a distiction on your outlook for three month versus five year way out five years at reset.
Here’s where the rubber meets the road. I suggest a wide diversified approach because who really knows?
I do not really see the 5 year being much of a kicker 5 years out personally. That base of 4.39% is lower then PACWP for example which gave 4.82%. Quite a difference compared to AGNC’s other preferred as well. Would have been nice to see 5% or what not plus 5 year. I realize it is one of the better mreits but I do not find it terribly compelling compared to an ABR-D which I think is another well ran mreit compared to most.
Finally filled at $24.10 at Schwab. Current quoted price is down to $23.99, no actual bid/ask spread indicated. Fairly crazy. AGNC HQ is just up the road from me in metro DC and has a decent rep for an MREIT. I’ve had a small holding of AGNCO picked up in the COVID crash at $15 (!). Currently trading at $22.47. Still holding. Who knows what’s happening these days, anyway. Right now, I’ll take the yield.
Funny…TD (Charles Schwab, where are you?) won’t even quote it yet. HA.
TD quotes but does not allow trading in this issue as of now!!
I cannot find anything in the FWP that specifies the reset interval. I am just being obtuse?
Be Here Now–here
Holders of the Series G Preferred Stock underlying the depositary shares will be entitled to receive cumulative cash dividends based on the stated liquidation preference of $25.00 per depositary share (i) from, and including, the date of original issuance to, but excluding, October 15, 2027 (the “first reset date”), at a fixed rate equal to % per annum (equivalent to $ per annum per share of Series G Preferred Stock or $ per annum per depositary share) and (ii) from and including the first reset date, during each reset period, at a rate per annum equal to the five-year U.S. Treasury Rate as of the most recent reset dividend determination date plus a spread of basis points per annum.
A “reset date” means the first reset date and each date falling on the fifth anniversary of the preceding reset date, whether or not a business day. A “reset period” means the period from, and including, the first reset date to, but excluding, the next following reset date and thereafter each period from, and including, each reset date to, but excluding, the next following reset date. A “reset dividend determination date” means, in respect of any reset period, the day falling three business days prior to the beginning of such reset period.
Hmm… The FWP at the provided link has none of that. What are you looking at?
Live and learn. That description is in the 424B5.
They must have went to lunch. Very slow getting fills. – Went 20 minutes with only one trade reported. Finally after waiting a while I got filled on my initial order at Fidelity at 24.40
And now got a strange partial fill of 184 shares at 24.36 on my second order
Never had that this type of partial fill on a new issue trading OTC. Oh well
Last order today – $24.00 at Fidelity filled
Placed an order at Fidelity for 1,000 shares at 24.30 and hasn’t filled despite several sales as low as 24.05. I’m guessing pink sheet orders don’t fill similar to a typical limit order.
Mav, Aside from the added fixed duration, the new issue appears expensive relative to the existing issues. Been adding to the “O” and “P” stash over the last few weeks w/current yield recently rising to ~7.25% and trading at significant discount to redemption price.
Alpha – I guess it depends on one’s goals and where you think rates will be in the future.
I myself like the 5 years fixed rate which based on my purchase prices between 24 and 24.40 yields between 7.95% and 8%
I actually sold some AGNCO and all my RC-E (what a dog) to fund some of the new AGNCL I bought. My thinking is that while AGNCO is trading at a greater discount to par, it is currently yielding 7.22% and doesn’t float until 10/24 at Libor + 4.993%. I am not counting on rates being high forever so I am betting in 2 years, AGNCO will be floating at a rate less than 8% and I am not sure AGNC will be looking to call it hence that discount may never get closed. But I have been wrong before. I just prefer the certainty of locking in 8% right now
I did keep a few shares of AGNCO to hedge my bets and all of my AGNCN seeing if they will call it or let it go floating next month (I know this new issue can fund a partial call of AGNCN which seems likely)
And my reason for dumping RC-E which is yielding that same roughly 8% given the discount it is trading at was to harvest some tax losses to offset some gains I want to book. Plus I view AGNC and NLY as the two safest Mreit operations – so that helps too.
But everyone has different goals / objectives / thinking
Mav, Still sitting on the O and P, but you have solid reasoning on the new one.
Plenty o’ opportunities now and guessing you too are hoping for one or two capitulation days so we can load up the wagon. Lot’s of lines in the water; some are starting to be hit, averaging down from prior sell-offs. The much-feared low-coupon, high-IG issues have been some of our biggest winners.
Alpha, yes – while I have selectively put some cash to use, I still have a chunk on the sidelines waiting like you for better opportunities to load up on. Just continuing to watch and be opportunistic.
Order for the 24.48 at Schwab – filled @ 24.47!! Vol ~576k shs
will try lower figure of 24.37 since discount was 3.15%
Hmm.. no trades for several minutes- some kind of cut-off?
Order rejected by TD; reason given:
“No opening transactions are allowed on securities affected by amendments to SEC Rule 15c2-11”.
Does this make sense?
Typical with some of the takes on the new issues on the OTC– varies by brokerage.
HOW RULE 15c2-11 WORKS NOW: Rule 15c2-11 requires market makers
to review basic issuer information prior to publishing quotations
for that issuer’s securities. Market makers must have a
reasonable basis for believing that the information is accurate
and from reliable sources. The Rule describes the kind of
information that the broker-dealer must review.
Thanks, Gary. Does this mean they will eventially allow trading after the review?
It’s trading- Schwab is allowing it- online for sure.
Now 24.00
Anyone able to buy this security? I called Merrill Edge and Vanguard and neither would let me buy yet. Thoughts?
Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.”
I am Azure
I Etrade. 24.48.
Etrade shows at $24.40 but won’t allow me to buy.
Sorry, my error. had not tried to buy.
Fidelity is showing a quote, but no bid/ask. It let me place limit orders. Filled at 24.40, below last trade.
also in at 24.40 which was below my bid price. Showing 24.60 mow
50 Shares filled at Fidelity at 12:26 for 24.40
Filled at Merrill Edge for 2000 shares at $24.30 👊🏻
$24.10 at Schwab.
Current 5 year treasury rate is about 3.3% but one year ago it was 0.8%. Big difference.