We can’t predict what next week will bring, but we sure can see that last was the best week income investors have had for months and months.
The average $25/share preferred and baby bond was up by about 1.6% as interest rates (as depicted by the 10 year treasury) fell by 14 basis points from the previous Friday.
The ‘relief’ rally in common stocks was pretty intense with a gain of around 4% in the S&P500–all this in a week where the Fed tacked on another 75 basis points to the Fed Funds rate and GDP for the 2nd quarter was a minus .9%.
I have continued to nibble– investment grade, term preferreds and some perpetuals preferreds (such as the Arbor Realty issues–any of the 3 as they are near equivalent). For next week I am pondering nibbling on the Customers Bancorp (CUBI) fixed to floating issues–some of the folks were discussing these issues in the Sandbox this week and I am always up to stealing a good idea. CUBI has 2 fixed to floating issues now floating with potential coupons of 7% to 8% in the future (dependant on 3 month libor)–this is a great coupon on a solid (not investment grade) banking company. Caution that the CUBI-E issue is trading 64 cents above call price ($25/share) so there is a small amount of call risk to be aware of–while the CUBI-F issue trades just below $25 at $24.85 so there is no call risk. These issues can only be called on a dividend payment date the next which is 9/15/2022. All fixed to floating rate issues with ‘potential’ coupons can be found here.
So off into a new week–the biggest economic number for the week are the employment numbers on Friday. 250,000 new jobs are forecast to have been created in July with the unemployment rate remaining at 3.6%.
Prices spiking on most beaten down names. Many up over 0.75 some over a dollar today.
Not sure why
Its still continuing, IYP, what a week. I bought a bunch of JBK last week around 25.80 (upcoming 6 month interest exD play)and even 300 more this morning under 26.10, and now I dumped them all but the ones I bought today (unsettled funds) at around 27.25. Somebody all the sudden wants to own an assload of this and capture that interest payment I guess. Why they didnt want them cheaper a week ago, I have no idea.
GRID-
E-TRADE shows a pay date of 8/15 of .7931 for semi-annual Wrong date?
That appears correct Gary, It pays twice a year, not quarterly. The trustee passes on the income to JBK owners after they receive interest payment from underlying GS bond they hold in trust.
These prefrreds over par are looking overbought. got 26.86 for FGBIP, SF-C near 26 somebody got 27.02, now set my sights on a couple others.
Thanks all for comments. Will explore all recommends.
Tim,
A few missing:
RZA (floats 9/15), RZB, ABR-F, CBKPP ($100), CKNQP ($100), ALL-B, SCE-H,SCE-J, SCE-K
I sold a few things increasing my cash position for the next leg down. If there is one. FOMO isn’t part of my strategy. At least I’ll have plenty of dry powder for the daily anomalies.
In the past few weeks, I sold a number of my $24+ preferreds and bought $18 to $21 preferreds from the same issuer (BAC, COF, JPM, PSA, WFC, etc.). I figured that for about the same yield, I might as well be in lower priced issues with more upside potential… and damn the convexity. This worked out well. Friday was a fast day and I couldn’t swap issues fast enough. Though not a major difference in price, a good example was COF-K up 82 cents and COF-J up 22 cents (intraday). It was the kind of day that you patiently wait for. So now, it it back to the waiting game or does the feeding frenzy continue? Looking forward to tomorrow to find out.
Tim – In using CUBI-E as an example on your chart of “potential” coupons, do all the yields in your “Current Yield” column of the chart and the prices in the “Quarterly” column reflect the FUTURE current yield and quarterly, not necessarily present day yield and quarterly the future quarterly? In other words, with CUBI-E quarterly just announced for the next coupon, shareholders will receive .44523 and the current yield will is 6.97% approx., not .50 and 7.73% However, as is the numbers in your columns are still very helpful only they might be misleading because they’re projections only, not reflecting what one might be getting with the next paid coupon, right? Of course with CUBI, one might not get these numbers in your two columns at all should they decide to announce a call for 9/15
2wr–the current yield is based off the ‘potential coupon’. I will add a note on the page indicating this is the way it is. In other words based on the 3 month libor on 7/29/2022 the dividend would be 50 cents.
Thanks, Tim…. Sounds as though that will only make your chart that much more valuable…
I regularly read comments in this forum and have learned much thru others experience. Also from some personal hard knocks. Tim mentions “nibbling some investment grade term preferreds.” What is the easiest way to find a listing of investment grade preferreds AND baby bonds without just reviewing the master list of preferreds and baby bonds and taking notes?
mminok–the best way is to used the ‘sortable’ google sheet.
https://docs.google.com/spreadsheets/d/1t40pMZWdsXpRe8GfE09juD9qw3SV7JVfmXEwH5RUYQE/edit#gid=0
Of course you need a google account. Then at the bottom is a ‘filter alpha’ tab. If you go to this tab the page that comes up has all sorts of sortable choices including the ability to sort for investment grade. The ratings are mostly correct, but I am sure some ratings changes slip by.
You can download this sheet for your personal use–if you ‘break it’ you will have to download again.
I did some manual review using various of the site’s online listings. And doing it this way, I found NO preferreds or bb’s that were investment grade AND redeeming short term. Since you said you had some, I must be looking at something wrong. I will use your instructs and see if I can get some of the lists downloaded. Thanks.
Downloaded a copy of the spreadsheet. Then did various sorts and sorts within sorts. Ended up with only 3 IG short term BBs with reasonable maturity dates – Tennessee Valley 2028, Tennessee Valley 2029 and Brightsphere Investment 2031. The current yield for Tennessee was low – Brightsphere was better but not really short term. So I am not sure where to find BB’s or term preferreds that are short term maturity and IG.
mminok–guess you have to define short term–but term preferreds and baby bonds with maturities before 2031 can be found here–
https://innovativeincomeinvestor.com/short-medium-maturity-income-issues/
BUT you will not find ratings for these issues as virtually all of them are non rated (except maybe by egan-jones).
I personally own the majority of the term preferreds and some of the baby bonds.
The IG issues I have been nibbling on (and most of them at say $1/share lower prices are from Assurant, AIG, Enstar, Apollo Global, Brighthouse Financial, Rivernorth Opportunity—all in the high 5%’s and low 6%’s.
What you are looking for – short duration, IG and high coupon—this would be the holy grail, but not something you will find.
Love ur analysis and comments. Since I am overloaded on perpetual preferreds, I really am looking for the holy grail. If it was obviously out there, it wouldn’t last long because u and ur savvy readers/contributors would quickly scoop it up. As always, thanks for ur insights.
Just a quick last suggestion—XAI Octagon 6.50% term preferred (XFLT-A) trading at 25.27–but sometimes dipping down to a bit less. 1st call in 3/31/2023 with mandatory redemption 3/31/2026. A bit of call risk now but if it runs to term would be a super yield. Not rated but implied IG because they are a CEF.
https://innovativeincomeinvestor.com/security/xai-octagon-floating-rate-alternative-income-trust-6-50-series-2026-term-preferred-shares/moodys
ZIONL meets your criteria ( i think) but there’s a hefty premium to owning it.
I used this list as a starting point…and looked up individual names.
https://innovativeincomeinvestor.com/short-medium-maturity-income-issues/
Mminok, Have you tried going to your brokerage bond platform and use their screening tool of IG and duration length? If you are just wanting to buy and hold you will find some quality issues maturing in that time frame. Dont know what yield it takes to pike your interest though.
For illustrative purpose here is a 2015 issued 2025 maturing A rated PECO Electric mortgage backed bond. Trading around par with a 3.3% yield. Obviously you can squeak out more yield with a lower IG rating purusing around the bond market.
https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C639927&symbol=EXC4295292
mminok – If you’re having trouble using Tim’s spreadsheet, have you tried quantumonline? If you look in the dropdown menu under Income Tables, the second item is Income Securities Screening Form. You can play with the parameters to suit your needs and maybe you can more easily come up with what you’re looking for. Sorry, Tim – lol..
You do not/not need a Goggle account to access the spreadsheet (I just clicked the link above and it opened). You do not/not need to download the sheet to sort (Google’s term is filter) the data, click the icon that looks like a funnel and you can perform multiple sorts (filters). You can even name your sort parameters to retrieve them as long as you don’t close the web page.
Thanks Bob–maybe something has changed since this page was set up years ago. Regardless I would be pleased with that change.