Athene Prices Fixed-to-Floating Preferred

Annuity company Athene Holding (NYSE:ATH) has priced their new large offering of fixed to floating rate preferred with an initial coupon of 6.35%

The company will sell 30 million shares with an additional 4.5 million available for over allotments.

The issue will be non-cumulative being a financial company, but dividends should be qualified for preferential tax treatment.

The coupon will float beginning on 6/30/2029 at a rate of 3 month Libor plus a spread of 4.253%

The shares are rated investment grade by Standard & Poors (BBB-) and BBB- by Fitch.

The pricing term sheet can be seen here.

Shares are to trade on the OTC Grey Market under temporary ticker ATHDF.

30 thoughts on “Athene Prices Fixed-to-Floating Preferred”

  1. Fidelity is placing an additional settlement fee of $50 for an online order (irrespective of order size) as it considers ATHDF as a non-Canadian foreign stock. I’m not inclined to pay this fee. So I’m out of it. Is TAD or E-Trade imposing this charge?

    1. SPM, TD accepted my online order without any mention of the $50 fee. I put it out at par just to check. At that time it was trading at $25.70 already.

      1. “C.MB” and “libero” thanks for checking. I saw the $50 charge as an Estimated Settlement Fee in the Fidelity Trading Ticket prior to order confirmation.

      2. I called Fidelity fixed income department re ARI-C full call (QOL on 6/10/2019). I asked active trader person whether there is a $50 foreign stock fee. His answer “probably but he needs to check). I called Schwab fixed income asking the same question, there is no foreign stock fee. I went to Vanguard brokerage site, it is also trading now, with message stating that a $50 foreign stock fee. I placed an order with Schwab @ 25.70

        1. Last Trade $25.885. Bid $25.90 Ask $26. I changed to 600 shares at Schwab at $25.75 good till cancelled. Not to be filled most likely today. 2,163,278 shares sold. Not sure whether it would filled Monday either. Did anyone get some?

  2. I think that with an “A” credit rating on the common stock by 3 different rating agencies, all with a “stable” outlook, they should be in pretty good shape. Being HQ’d in Bermuda, US holders should consider stuffing this one in an IRA to avoid foreign taxes. My thoughts… I’ll be moving in on this one for sure to help ‘offset’ losing KMPA and Merrill no longer allowing me to purchase more KTBA.

    1. What do you mean “losing KMPA”, I do not see where it has been called ?

      1. TNTowanda there will be no witholding. These Bermuda outfits generally have subsidiaries and do this below which is in the prospectus…

        Athene Annuity Re Ltd., a Bermuda reinsurance subsidiary (“AARe”), has elected under Section 953(d) of the Code to be treated as a domestic corporation for purposes of the Code. One or more of our other non-U.S. reinsurance subsidiaries may also make such an election. Accordingly, AARe and any other electing non-U.S. reinsurance subsidiary will be subject to U.S. federal income tax and is considered a U.S. subsidiary for purposes of the U.S. federal income tax considerations discussed herein.

        1. @Gridbird Tim states the securities should be eligible for qualified (if I understood him). So, I got confused why the recommendation to put in a retirement account. My own personal preference is to put potential capital gains in retirement. I am a decade or more away from mandatory distributions. Thanks so much for assisting. I follow you on all the sites and have found over a year of observation your comments, analysis and such are intelligent and well thought out.

          1. TNTowanda, these things can be confusing. And the QDI (qualified) and foreign tax witholdings are separate unrelated issues. For example the Canadian preferreds that trade OTC. They are QDI, but they still have that 15% foreign withholding in taxable accounts (and sometimes in tax free unfortunately). But in this case this issue is qualified eligible but should not have a withholding…I am guilty of not doing this, but it should always be referred to as qualified eligible. As the dividends cant be QDI, if they are not making money..Most do though. In case of utilities they largely earn profits quarterly or have so much retained earnings banked up qualified is usually never a concern.

          2. TN – in many situations potential cap gains may not be the best thing for a qualified account. Outside of qualified they will qualify for lower cap gains tax treatment (0, 5 or 20 percent).

            Inside a qualified account (other than a Roth) any cap gains withdrawn will be taxed as ordinary income (10-37%).

            I am assuming here that you are talking about long term buy and hold investments.

            1. Bob, Thank you very much. I should have been more clear. I have multiple retirement portfolios (SEP, DP, IRA) etc. I converted to Roth on one of these a few years back. So, I was speaking of my Roth account. My hope is to live on these retirement distributions and leave a step-up basis for my children when I pass. However, that as I always say is subject to future in laws and my treatment in old age. 🙂 As an alternative, I will just book Cunard cruise trips and spend my money!

              1. Understood. Everything has to make sense in the context of the whole. I like the Cunard idea!

        2. Thanks. Do you have a link for the prospectus. Not able to locate. Spoke with Vanguard and they stated taxes would be taken out.

            1. Thanks. Vanguard charging $50/trade plus trading at 25.75. I will pass. Vanguard now saying no withholding-that’s good.

          1. Will – For future reference and to perhaps save you some time in the future, if Tim mentions a new issue on here, such as he did with Athene starting with the 6/5 article, Athene Holding to Sell Fixed-to-Floating Preferred, most likely you’ll be able to find a link to the preliminary prospectus right here within the article….

    2. A credit rating on the stock? I’ve managed money for 30 years and never heard of such a think. Debt looks good though.

    1. Not much, since it’s a Bermudian issuer. But you can send a cheque to Mr. Dressup if you like.

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