Eagle Point Makes ‘Calls’ for Redemption

Eagle Point Credit (ECC) has made a call of numerous issues of ‘term prefeerreds’ and notes.

The company which just sold a note issue with a 5.375% coupon (ECCZ) made a full or partial call on 3 different issues.

They have made a full call on the 7.75% term preferred (ECCB) for 2/28/2022, a full call on the 6.75% notes due 2027 (ECCY) for 2/14/2022, and a 50% call on the 6.6875% notes due 2028 (ECCX) for 2/14/2022.

All issues are called at $25 plus accrued dividends or interest. The SEC notice is here.

Many issues of ECC remain outstanding–although obviously not at such lucrative coupons.

mbg and others posted this call on Friday.

Eagle Point Credit Prices New Note

Eagle Point Credit Company (ECC) has priced their previously announced new issue of $25/share notes.

The issue prices with a coupon of 5.375%.

The issue pays quarterly interest payments

Egan Jones has assigned a BBB+ rating to the issue.

Being a baby bond there is no OTC trading–the issue will trade in about a week on the NASDAQ exchange.

The pricing term sheet can be found here.

Eagle Point Credit to Sell New Baby Bond

CLO owner (collateralized loan obligation) company Eagle Point Credit (ECC) has announced they are selling a new issue of notes ($25 baby bonds).

The company MAY use the proceeds to redeem either the ECCB 7.75% term preferred and/or the 6.687% notes (ECCX) and/or the 6.5% (ECCY) notes.

The issue will have a maturity date in 2029–there will be a optional early redemption available to the company but the dates have not been announced.

The notes are rated BBB+ by Egan Jones.

Eagle Point Credit has term preferreds, perpetual preferreds and baby bonds currently outstanding–they can be seen here.

The preliminary prospectus can be read here.

mbg was on this one and Larry Robard chimed in with yield talk in the 5.25-5.375% area.

BIP Bermuda Holdings Prices New Baby Bond

The previously announced new baby bond issue from BIP Bermuda (BIP) has been priced. This issue is an obligation of Brookfield Infrastructure Partners (BIP)

The issue, which is investment grade, prices with a coupon of 5.125%.

These notes have no maturity dates–but there is an optional redemption period available to the company starting in 2027.

As we noted yesterday the interest on these notes can be deferred without being in default.

The permanent ticker has not been announced.

The pricing term sheet can be found here.

Hold On to Your Hats – CPI in 3 Hours

Hold onto your hats since we have the Consumer Price Index (CPI) being released in just 3 hours.

Expectations are for a reading of 7% on the headline number (year over year) with core CPI at 5.4% year over year.

So the 10 year treasury closed at 1.75% yesterday after meeting resistance at 1.81% on Monday–if we see a CPI release that is lower than 6.7% on the down side or more than 7.3% we could see fireworks. On the low end the narrative will be “the Fed can delay interest rate hikes”. On the upside we could hear ‘talk’ of larger interest rate hikes (for instance between 37.5 and 50 basis points in March instead of 25 basis points) or an accelerated run off of the balance sheet.

Of course there is nothing an investor can reasonably do in preparation for the number release except buckle up and wait. As always we hope for interest rates increases to occur at a slow pace–what really happens we have no control over.

Right now equity futures are just a little ‘green’ with no real movement in interest rates–but no doubt these numbers will be more volatile in a few hours.

Brookfield BIP Bermuda to Sell New Baby Bonds

Brookfield BIP Bermuda Holdings I Limited (BIP) will be selling a new issue of perpetual subordinated notes.

Interest payments will be quarterly. There will be a optionally available redemption period for the company starting in 2027.

These are perpetual subordinated notes so there will be no stated maturity date.

The issuer is a division of Brookfield Infrastructure Partners (BIP).

The issuer has the right to defer interest payments as shown below from the prospectus–

Interest which accrues during an Interest Period will be due and payable on the relevant Interest Payment Date, unless the Issuer elects, in its sole discretion, to defer the relevant payment of interest (in whole or in part). The Issuer may, at its discretion, elect to defer any payment of interest (in whole or in part) which is otherwise scheduled to be paid on an Interest Payment Date; provided that any such deferred interest shall become due and payable on the date the Issuer declares any distributions on any of the Issuer’s common shares or preferred shares. If the Issuer elects not to make all or part of any payment of interest on an Interest Payment Date, then neither the Issuer nor any Guarantor will have any obligation to pay such interest on the relevant Interest Payment Date. Deferred interest will accrue, compounding on each subsequent Interest Payment Date, until paid.

The preliminary prospectus can be found here.

Early Bird was on top of this one.

Monday Morning Kickoff

Well after last weeks rout of the Nasdaq by 5% and the S&P500 moving lower by 2% I look forward to a bit of stabilization. On the other hand with the consumer price index (CPI) being released on Wednesday we have potential for mid to late week fireworks. A 7.1% year over year increase is expected–any substantial deviation higher from the expectation could serve to send equities into a tail spin.

Interest rates, as represented by the 10 year treasury, shot higher by 26 basis points to close at 1.77%. With continued yakking by Fed presidents this week we are on the verge of breaking through the current level and moving above 1.80%. Regardless where rates go we would like it to happen a bit slower than the climb last week–slow movements are less damaging to income securities–less likely to cause a taper tantrum.

The Fed Balance Sheet had a 2 week movement (they were behind because of the holidays) of minus $25 billion.

The average $25/share preferred stock and baby bond moved lower last week by 18 cents. Investment grade issues fell by 28 cents and banks by 20 cents. Shipping issues being the lone sector with a gain of 11 cents.

Last week we had 2 new income issues and 1 reopening of an issue.

KKR Real Estate Finance (KREF) announced they were reopening their 6.50% cumulative, perpetual preferred (KREF-A). The company sold 4.4 million new shares in the reopening. The issue closed at $25.37 last week.

Storage giant Public Storage (PSA) sold a new 4.10% perpetual preferred which is trading under ticker PASDV and closed Friday at $24.73.

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Oxford Lane Capital (OXLC) sold a new baby bond with a meager coupon of 5.00%. This issue will trade on NASDAQ under ticker OXLCZ. The issue is not trading as of yet, but should trade this coming week.

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KKR Real Estate Finance Prices Reopened Preferred

As noted yesterday KKR Real Estate Finance (KREF) has reopened their 6.50% perpetual preferred issue (KREF-A).

The company sold 4.4 million shares with another 660,000 available for over allotment at $25.13/share.

This will mean there will be at least 11.3 million shares outstanding.

The pricing term sheet can be found here.

KKR Real Estate Finance Trust Reopening Preferred Issue

KKR Real Estate Finance (KREF) has announced they are selling more share of their KREF-A 6.50%, cumulative, redeemable issue.

The original issue was sold on 4/9/2021–6.9 million shares were sold at that time.

Current holders are likely not too appreciative of this reopening as shares took a tumble with the announcement. At this point we don’t know how many shares they will be selling. The original issue details are here.

The preliminary prospectus can be found here.

Oxford Lane Capital Prices New Baby Bonds

has priced their previously announced $25/share baby bond.

The issue prices at 5%.

This issue is rated BBB by Egan Jones.

The bonds pay quarterly interest on the last day of 3,6,9,12.

There will be no OTC trading–the issue will trade on NASDAQ under ticker OXLCZ when trading begins in about a week.

The pricing term sheet can be found here.

CHS Releases Blockbuster Earnings.

Giant ag cooperative CHS today announced earnings for the quarter earnings for the period ending 11/30/2021.

The company reported blockbuster net earnings of $452 million which was mostly generated from the agricultural division which has benefited greatly from high grain prices.. Energy (refining) contributed $69 million to net income.

CHS (untraded) has numerous quality, yet high yield, preferreds outstanding which can be seen here.

The company press release can be read here.

For those wanting all the detail the 10-Q can be found here.

Oxford Lane Capital to Sell New Notes

Oxford Lane Capital (OXLC) will be selling a new issue of $25 notes. OXLC is a holder of collateralized loan obligations–CLOs.

These notes will have a ticker of OXLCZ when they are priced and begin trading in a week or so.

The company has a number of issues (notes and term preferred) currently outstanding which can be found here.

The preliminary prospectus can be found here.

Public Storage Prices New Preferred

Self storage giant Public Storage (PSA) has priced their new preferred stock offering.

The issue prices at 4.10% and is cumulative and non qualified.

This coupon is about as expected as their previous new issues were at 3.95% (PSA-Q) and 4.00% (PSA-R).

The issue trades immediately under OTC temporary ticker (PASDV).

The pricing term sheet can be found here.

Public Storage Announces New Preferred Issue

Storage giant Public Storage (PSA) has announced they will be selling a new issue of preferred stock.

Of course the company has many issue of preferred outstanding right now which can be seen here.

The issue will be investment grade, cumulative and non qualified.

The preliminary prospectus can be found here.

Rates Are Popping

In what is a strong move in interest rates the 10 year treasury is up by 12 basis points today to be at 1.63% at this moment. This is closing in on the highest yield of the last 6 months which occurred in October at about the 1.67% level.

The 2 year treasury is just 5 basis points higher indicating the yield curve steepened a bit.

The high yield in the last 12 months is in the 1.76% area and considering the level of inflation rates should be much higher than the current level–but we shall see where they go.

Thus far preferred stocks and baby bonds have just been ‘nicked’ a bit–off 8 cents.

2022 Kickoff–Monday Morning Kickoff

Well here we go into what is potentially a year filled with land mines in the form of increasing interest rates. Of course this statement has been made many times in the last decade by myself and the talking heads on the boob tube. As a number of folks have commented in the last year–watch what the Fed does, not what they say. Will Powell do another about face and become dovish when we get the next inflation number? Will he backpedal when equity markets tumble 10% in a week? Nothing is known for certain–we’ll just all have to wait and see.

Last week the S&P500 rose once again with a gain of just less than 1% closing at 4766. This morning the futures market is up over 1/2%–will it hold – no one knows of course.

The 10 year treasury closed last week at 1.51% which was up 2 basis points from the previous Friday’s close. Interest rates are trading a couple more basis points higher this morning at 6 A.M.

The Federal Reserve balance sheet grew once again on the week–this time by $34 billion. That is a 2 week growth of $126 billion and December growth of $140 billion. NOTE that the FED is a week behind in updating number because of the holidays. This number is about timing and we should see a big slowdown in this growth soon with tapering.

The average $25/share preferred stock and baby bond rose by 11 cents last week. Banks rose by 9 cents, investment grade issues by 14 cents and mREIT preferreds by 11 cents and shipping preferreds by 7 cents. December is a big ex dividend month and likely we have some bounce back from ex-dividend dates.

Last week once again last week we have no new issues in the baby bond and preferred stock arena. We should see issuance get back to a more normal pace this week.

Interest Rates Are Popping

Today I see that the 10 year treasury is popping a bit–up 7 basis points to the 1.54% – 1.55% area.

Logic tells us that with Fed tapering supposedly going on there is substantially less demand for all the paper that the Treasury has to sell. We have seen some firming of interest rates globally and minor reductions in quantitative easing which could possibly reduce demand for U.S. paper.

I will not be surprised to wake up one morning and find the 10 year popping into the 1.70 to 1.75% area in the month ahead. It is likely that this ‘pop’ will cost us a little capital, but by remaining in shorter maturity bonds and term preferreds losses should be very minimal.

Medallion Financial Officers Charged with Fraud

The SEC has charged the CEO and COO of Medallion Financial (MFIN) with fraud related with schemes to boost the share price.

Medallion has a preferred issue outstanding and trading at $26.49–I would expect to see the share price tumble—the common shares are off 53% in pre-market trading.

This is a developing story —the short announcement is here.

Monday Morning Kickoff

A shortened week didn’t stop the S&P500 from moving higher by 2.3% and record highs. Of course thinly traded markets can move readily in either direction–plus there is no reason to believe that common stocks will be moving lower anytime soon as adequate liquidity remains available.

The 10 year treasury moved higher by 9 basis points from the previous Friday closing at 1.49%. Of course each week brings us closer to the time when there will be no Federal Reserve support in the form of QE. As higher interest rates and less QE take place on a global basis we have potential for a real interest rate shock with a move of the 10 year to the 1.75%-2.00% area. Of course we have looked for higher rates for literally years and markets have made fools out of all the ‘experts’ in this regard.

The Federal Reserve balance sheet shot higher by $92 billion–very interesting. I assume this is a timing issue. As noted by some of the readers watch what the Fed does – not what they say.

Last week the average $25/share baby bond and preferred stock continued on a flattish trajectory as the average share moved just 6 cents higher. Investment grade issues moved 15 cents higher while bank issues moved 5 cent higher mREIT preferreds up 3 cents.

With the shortened holiday week we had NO new issues priced last week. I wouldn’t be a bit surprised to see nothing new announced this week as well.

Some Priority Income Fund Data

I see there is some discussion surrounding untraded closed end fund Priority Income Fund.

As most of us know Priority Income Fund has numerous ‘term preferred’ stock issues outstanding and 1 ‘perpetual preferred’ issue outstanding. Of course the difference is the ‘term preferreds’ have a ‘date certain’ for redemption (assuming the company remains solvent) while the ‘perpetual’ issue will remain outstanding until at least 2026–and maybe forever as there is no mandatory redemption date.

You can see all of the issues outstanding here.

The problem expressed by many is the lack of information from the company–mainly to preferred shareholders. I will say that owning 2 or 3 issues of the preferreds I have noted a lack of information–BUT there has been no issue whatsoever in receipt of dividends on a timely basis.

If a stockholder would look for any normal announcements of dividend declaration–good luck. It appears that the company has substantial difficulty with their investor relations–at least as far as ‘senior security’ holders go recently.

Here you can find the company’s press releases. You will find plenty of information–but little related to preferred stock dividends. They did announce a declaration in May, 2021 and previous to that they announced for all of the quarters in 2020.

On the other hand if you dig you can find the information–just not with a traditional press release.

Here is how I get my info on the company–and no one should have to dig this hard–but I do it because I need to know before I invest in a company.

Go to the menu for Priority Income Fund on the SEC Edgar website–here. The first item on the list is the N-2 Registration for the new proposed preferred stock offering. THIS DOCUMENT HAS EVERYTHING YOU WANT TO KNOW.

Click here and you have a summary of 7 years worth of financials. For me the net asset values at the beginning and end of each year are of interest.

If you scroll 30 pages down from the above information you will find information on the preferred shares. Included in this information is the fact that they have $68 in assets for each $25 preferred share outstanding–a leverage coverage ratio in the 270% area (as of 6/30/2021) and slightly better as of 9/30/2021. As a preferred holder you want his as high as possible and it is required to be not less than 200%.

If you go all the way down to page F-15 (I can’t link this page) you will find the ‘audit’ letter from BDO for the year ending 6/30/22021—AND the audited financials statements –balance sheet, statement of operations, cash flow statements etc. for the year ending 6/30/2021. You will note that the company has performed well over the years (although they pay Prospect Capital, their manager, plenty).

The company does publish a semi-annual and annual report each year. For some this may be an easier ‘read’. The last one was filed on 8/27/2021 for the year ending 6/30/2021. Like the N-2 registration statement noted above this annual report has a plethora of information.

So in summary you won’t find official announcements very often from Priority, but the documents mentioned above will give you substantial had data to review.

Priority Income Funds ‘Tees Up’ Another Preferred

As noted by Ken Priority Income Fund (not exchanged listed) has teed up another new issue. This new issue is a perpetual preferred (they have sold mostly term preferreds in the past).

They have filed a new registration statement–so they plan to come with a new issue soon, but the exact day is not known–Priority has a habit of filing and then it may take anywhere from 2 days to 2 months before the new issue is actual launched.

The company has a 7.00% term preferred available to redeem on 3/31/2022 so that may be a target of theirs although no mention is made of a redemption.

Priority Income Fund has bunches of issues outstanding right now–none currently callable.

The new registration statement can be found here.

Soluna Holdings Selling More Preferred Stock

Soluna Holdings (SLNH) (previously Mechanical Technology) is selling more of their 9.00% perpetual preferred stock. The initial offering was only in mid August.

As you might expect the shares which were already trading weakly in the $22/share area have now fallen to the $20/share area.

The company announcement can be found here.

Looks Like Santa Is Only Bringing Coal

Another rough day in the equity markets–although maybe prices have found their bottom for the day. The S&P500 is off about 4.3% from the 52 week high so hardly a ‘correction’ (actually not a correction at all–just kind of a wiggle).

Interestingly interest rates have moved a few basis points–and checking my accounts they are just as ‘quiet’—very quiet.

The week appears to be a quiet one for income investors–and I suspect for new issue issuance–who wants to mess around with new issues when it is a holiday week and folks are rushing to do some last minute shopping (I know I will be tonight–no use rushing these things!!).

For now I am doing zip–nothing at all investment wise. I have boatloads of monthly payors and they are doing the job right now–not sure I want further commitments before the new year.