Another Investment Grade Issue Called

Bank of America (BAC) called their 6.50% perpetual preferred (BAC-Y) today for redemption on 1/27/2020 which is the 1st day they are available to be redeemed.

No loss will be incurred by holders as it was trading around $25.40 yesterday.

This is one more issue gone from the “Investment Grade $25 issues in or near 1st redemption date” list.

I did not have this issue on the list from back in November since it was a few months out, but it looks like I should update the list further with additional issues–say up to 3 months out.

Here is the list–showing how many issues have been called for redemption in the last month.

NOTE–the yield to worst shown is incorrect-as it doesn’t count accrued dividends/interest, but I hope to install a new formula before long.

I continue to hold the Vornado Realty Trust (VNO-L) perpetual (VNO-L) 5.40% and the WR Berkley (WRB-B) 5.625% Subordinated Notes.

The reason to hold some of these issues is because they are tied to $25 fairly closely because they are in, or near, potential redemptions and thus likely trade with less volatility–and their coupons are strong in the current rate environment.

As always if you have a Google account you can take your own copy of this list.

11 thoughts on “Another Investment Grade Issue Called”

  1. Hi Tim, Since so many big issues are being called, will the PFF rebalancing in Jan. have a material effect on the lower coupon replacements?

    1. Hi Georges, are you referring to Ford´s baby bond? I wasn´t able to find the ticker for that issue..

      Thank you

      Pablo

  2. Seemingly many investment grades pfds. paying decent dividends are being called. Why not when the cos. can reissue at lower rates? Good for them, not so good for us investors.

  3. AEK aegons were also called.

    Anyway the new issue calendar has had more come to market in the shortest time I can remember over the past 25 years.

    Q Is this the top or not? Many postulate that the US will follow the world’s interest rate yields lower. another theory is that we will get more trade talk certainty along with another cut in taxes. Pushing you know who into a second term. Now THAT may push rates the other way.

    As a side bar some of my fixed to floats have gone up another buck in a week. Pushing to mid 3 YTC (finally). I do plan to sell most everything over next 6 months. 28 ++ is enough for now.

  4. MFO remains a mystery to me. I sold my position over one year ago sure they would refinance the issue and save at least 1% (current coupon is 8%) but it is still there!

  5. What do you think about HSBC-A,ISG and BK-C prefereds? They are all callable and the levels they are trading are very attractive for entering a short position

    1. catchmeifyoucan—from the long side you would be kind of foolish to hold these–short-would seem reasonable, but as you know if you are short irrational behavior can cost you a few bucks.

    2. catchme – have you ever tried shorting any of these or any similar preferred? I have not but I think I looked into it in the past and found it very difficult to do. Of the 3, be careful on ISG and BK-C as both are only callable on coupon payment dates, thus amount of accrued will be relatively high…

    3. Have you actually managed to short these? Which broker allowed this and at what cost to borrow?

      I had tried to short a bunch of them in late Q4 2018 soon after the big bank new issues went down big and trading below NAV and 2-3 brokers I tried said outright no or made it rather too costly.

      1. E*TRADE does, but the price can be high if the volume isn’t high. And what they allow to be borrowed is somewhat hit and miss.

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