In what is becoming an all too familiar trend a $1,000 note will be issued to call a $25 baby bond.
BDC Monroe Capital (MRCC) will be selling a $1,000 note to redeem their 5.75% Notes due 2023 (MRCCL).
There will be no damage to baby bond holders as shares now trade at $25.20.
The prospectus with ‘use of proceeds’ language can be found here.
David, Learn to sell call on round lots, pay attention to xdiv dates.
If they run up let them get called away, or credit roll forward.
If they go down, those calls you sell will get cheaper, so know what to do to buy to close and stop out the common. This is not instant but can be quick.
There are ways to set up contingent orders for this so you do not have to worry the screen all day.
It fairly easy to learn and self-administer.
Even if you ignore all this…use stops if you are nervous common stock holder. Hey, trades are free now!
I own or should say own today, MVCD, MRCLL and NEWTI. Think its time to start to look at some common shares that are paying good dividends and have some opportunity to appreciate. Looking at MO, BTI, VZ, PFE, AND PM. Anyone have an opinion on these?
All your common choices pay good divs but no appreciation, some losses in fact.Although lower yields maybe PEP , RTX, BAC, WMT, BMY
Looking at the big picture one sees many $25 exchange-traded issues being replaced with $1,000 institutional issues and also preferred being replaced with debt.
Comparing yields on exchange traded issues vs same issuer issues in the institutional markets, yields are MUCH lower in the institutional market right now.
But this is not always the case. The relative yields between exchange traded and institutional goes back and forth and at times it is better to be in the institutional issues.
Current example of this phenomenon is PSEC today placing a 5 year note today institutionally at 3.706% priced at a discount to yield 3.98% approx. Proceeds intended to refund PBB.
Thanks for the tip, Tim. Do you have any details on date and accrued interest at redemption? I’ve looked but can’t seem to find info. Thanks.
I am assuming it’s the 01/31 distribution date since Mrccl went ex-div yesterday. Think that’s correct?
Wilson – no – not quite right… There’s not been an actuaL announcement of call on MRCCL yet. That means that the earliest it can be would be 2/15 approx but will probably coincide with 30 days from the actually closing date on the 1k issue.. But you are right that anyone who buys MRCCL now for the call will only get accrued from 1/31 to call date….
Thanks. Helpful.
Geez, losing count of all my recent and near-future redemptions/calls…
On the preferred front, Dynex Capital just announced redemption of their 7.625% Series B shares.
Thanks Ron
In the last few months we have seen a flood of redemptions, but with the slight spike in the last week, I am guessing we are going to see even more of a flood with a potential fear of rates going higher. By the end of the year, it is possible that we see .2 to .5 increase and higher inflation especially if 40% increase in unemployment checks, state and gov’t checks, ppp checks, individual stimulus checks, infrastructure projects. Prices will increase.
I would suggest that we have a little more dry powder, or buy investments that are being redeemed in a year and with little call risk.
I wonder when “helicopter money” will be renamed B-747 Dreamlifter money… with of course no consequences……