American Equity Investment Life Holding Company (AEL) has announced the issuance of a new fixed-rate reset non-cumulative preferred stock. A fixed-rate reset issue will be fixed for about 5 years and then be reset every 5 years to a new coupon determined by the ‘spread’ which is added to the 5 year treasury.
The issue will be non investment grade—BB by S&P.
The company currently has a 5.95% issue already outstanding and it is a fixed-rate reset preferred and has traded weakly – now at $22.27. This issue has a weak reset rate of 4.322% which when added to the 5 year treasury (around .47%) is around 4.80%–this new issue will need to be better.
The key to the attractiveness is what the ‘spread’ will be when the issue reaches the reset period.
You can find the information on the currently outstanding issue here.
The preliminary prospectus for the new issue can be found here.
mcg was right on it-as always.