Asset Manager Affiliated Managers Group to Sell Baby Bonds

Affiliated Managers Group (NYSE:AMG) will be selling a new Jr Subordinated note with a maturity date out in 2059.

AMG previously had a number of baby bonds outstanding, but all have been called in recent years. This new issue will be their only baby bond outstanding.

Affiliated is a fairly large asset manager with over $700 billion in assets under management.

The issue doesn’t have a current rating available, but we believe based on ratings from the past it will rate BBB+ by S&P and Baa1 by Moodys.

The issue DOES have a deferment clause in the prospectus. The company can defer interest payments for up to 20 consecutive quarters (5 years) 1 or more times.

The preliminary prospectus can be seen here.

10 thoughts on “Asset Manager Affiliated Managers Group to Sell Baby Bonds”

  1. Merchants Bancorp Prices Perpetual Preferred Stock Offering

    PR Newswire PR NewswireMarch 21, 2019
    CARMEL, Ind., March 21, 2019 /PRNewswire/ — Merchants Bancorp ( “Merchants”) (MBIN), parent company of Merchants Bank of Indiana (“Merchants Bank”), announced the pricing of an underwritten public offering of 2,000,000 shares of its 7.00 % Fixed-to-Floating Rate Series A Non-Cumulative Perpetual Preferred Stock, (the “Series A preferred stock”), with a liquidation preference of $25.00 per share. Merchants has granted the underwriters a 30-day option to purchase 300,000 additional shares of the Series A preferred stock.

    (PRNewsfoto/Merchants Bancorp)
    (PRNewsfoto/Merchants Bancorp)
    When, as, and if declared by the board of directors of Merchants, dividends will be payable on the Series A preferred stock from the date of issuance to, but excluding April 1, 2024 at a rate of 7.00 % per annum, payable quarterly, in arrears. From and including April 1, 2024, dividends will be payable at a floating rate equal to three-month LIBOR plus a spread of 460.5 basis points per annum, payable quarterly, in arrears. Merchants may redeem the Series A Preferred Stock at its option at a redemption price equal to $25.00 per share, subject to regulatory approval, on or after April 1, 2024 or within 90 days following a regulatory capital treatment event, as described in the prospectus supplement and accompanying prospectus relating to the offering.

    Net proceeds from the offering are expected to be used for general corporate purposes including to support balance sheet growth of Merchants Bank and potential selective future acquisitions.

    Sandler O’Neill + Partners, L.P. is serving as sole underwriter.

    A shelf registration statement, including a prospectus, with respect to the offering was previously filed by Merchants with the Securities and Exchange Commission (the “SEC”) and was declared effective by the SEC on December 18, 2018. A preliminary prospectus supplement relating to the offering has been filed with the SEC. The offering will be made only by means of a prospectus supplement and accompanying prospectus. When available, copies of the prospectus supplement and the accompanying prospectus relating to these securities may be obtained free of charge by visiting the SEC’s website at, or may be obtained from Sandler O’Neill + Partners, L.P., 1251 Avenue of the Americas, 6th Floor, New York, New York 10020, Attn: Syndicate Operations, Telephone Number: 1-866-805-4128.

    This news release shall not constitute an offer to sell, or the solicitation of an offer to buy any security, nor shall there be any offer or sale of these securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

    1. Thank you Nomad, hopefully it will come to market soon. I am going to buy some of these stinky filth preferred.

        1. Bob, it convinced me it belongs in the “filthy preferred” category. Im a bit low in this category. I bought a few hundred NGHCN at $21.05 yesterday and it bounced almost 50 cents by market close. I have several of these but in small apportionments. The bank actually has a bloated 8% preferred on the books that is private placed. I suspect it could be an older insider goody bag issue like FIISO.

  2. I have seen that deferment clause in other subordinated debt and so stayed away. But how likely is deferment to happen? Am I concerned needlessly?

    1. Be Here Now–I kind of ignore it–I would rather not see it, but hopefully us investors would be out of any issue with a potential issue.

      I own the new NextEra Energy baby bonds and it has a similar (but longer) deferment.

    2. Be Here Now, just some added commentary. Its basically a preferred stock sitting on debt side. Cummulative preferreds in essence act the same way except they can be deferred indefinitely. And keep in mind any subordinated debt defered means all dividends from common and preferreds if any will have to be suspended first. I have seen many utility issues like this through the years and never seen a deferral. Now if PCG had any they would have been suspended for sure.
      AES-C was a $50 par subordinate debt issue with deferral clause. AES got to edge of bankruptcy and this issue cratered down to about $5 and never once suspended the payment (it has since been redeemed at par). Now OSBCP is a bank trust issue that was differed for almost 5 years during debt crisis. But it did finally pay..Most through help of TARP bailout as the bank should have went bankrupt. Quality issues will not be endangered. I own these all the time. I bought PPX today again and if I am not mistaken is has a deferral clause too. But I really dont care. I am more worried about the quality of the company and yield than the deferral clause myself. Because if it was ever used, that meant I should have been out of the issue long before the problems began.

      1. Thanks for all the answers. It is very helpful to think of these as like preferreds on the liability side of the balance sheet, but with the added benefit of being ahead of all common AND preferreds.

        1. BHN, I went through the same process you did 7-8 years ago when first looking at them. The deferral did at first ponder the same thoughts as you have. But your above thought best expresses the true reality of the system and they actually are safer in terms of their stack. The purpose of the deferral is to allow breathing room for a company to work through any short term financial problems if they would occur. If it didnt have that clause, it could lead to a chain reaction event for a bankruptcy filing. And usually that of course is not to the benefit of a subordinate debt holder, or preferred owner.

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