Affiliated Managers Prices Baby Bonds

Affiliated Managers (AMG) has priced their previously announced baby bond.

The coupon will be 4.75%. The issue is investment grade being Baa1 by Moodys and BBB- by Standard and Poors.

The issue has a maturity date in 2060 and an optional redemption period starting in 2025.

The company can defer interest payments for 20 consecutive quarters without being in default.

The pricing term sheet can be found here.

Affiliated Managers Group Joins the Baby Bond Issuance Parade

Another investment grade baby bond is being issued by Affiliated Managers (AMG).

The company joins the issuance parade of investment grade firms selling baby bonds to lock in some nice coupons. The company is rated BBB- by S&P and Baa1 by Moodys.

The new issue will have a maturity date of 2060 with an early call in 2025.

The company may defer interest payments for up to 20 consecutive quarters without a default.

The company has 1 other baby bond outstanding as well as 1 convertible trust preferred issue which is callable now. These issues can be seen here.

The preliminary prospectus for the new issue can be read here.

mcg was on this one.

WR Berkley Prices Baby Bonds

Insurer WR Berkley (WRB) has priced their new issuance of baby bonds.

The coupon is set at 4.25%. The bonds are investment grade.

The bond will mature in 2060 and will have an optional redemption starting in 2025. The company may defer interest payments for up to 5 years (multiple times) without being in default.

Proceeds from this issue will be used to call the balance of the WRB-B 5.625% baby bonds.

The pricing term sheet can be found here.

WR Berkley Announces New Baby Bond

Insurer WR Berkley (WRB) has announced a new issuance of baby bonds.

The company which had sold a 4% $1,000 senior note issue around 9/1/2020 with proceeds going to a partial redemption of baby bond 5.625% (WRB-B) will be using some of the proceeds of the new baby bond to call the remainder of the WRB-B issue.

The new issue will be investment grade so look for a coupon in the mid 4’s.

The preliminary prospectus can be seen here.

j was on top of this new issue.

Southern Company Prices Baby Bonds

The Southern Company (SO) has priced their previously junior subordinated debentures.

The coupon will be 4.20%–plenty low, but it will be strongly bought.

As announced the company will be calling all or a portion of the 6.25% Jr subordinated debentures (SOJA).

The issue is investment grade.

The pricing term sheet can be found here.

Franchise Group Prices New Preferred

Franchise Group (FRG) has priced their previously announced new cumulative perpetual preferred issue.

The coupon will be 7.50% will be cumulative and qualified.

No OTC grey market ticker has yet been announced–the trade on the issuance doesn’t take place until today so I suspect we will see the OTC ticker sometime today.

The pricing term sheet can be see here.

Past 1st Call and Trading Above Liquidation Preference–Until It Isn’t

Markets are dangerous for snoozers and dreamers.

Data center owner Digital Realty (DLR) has called their 5.875% perpetual preferred today–effective 10/15/2020.

The issue went ex-dividend yesterday for around 37 cents.

The issue has been redeemable since 4/2018, but yet was trading near $26 a day or two before ex–it went ex for 37 cents but bounced right back up toward $25.90. The company dropped the call this morning and shares are now trading at $25.06.

It is interesting that DLR is selling Euro Note debt at 1%–hint–don’t be fiddling with investment grade preferreds past call dates.

Of course we all mostly know this, but I post it as one more example of what a newer investor should not do.

Southern Company to Sell Baby Bonds

Giant utility Southern Company (SO) will be selling a new $25 baby bond. It is noted that the company will be selling a $1,000 series at the same time.

This baby bond will have a maturity in 2060 and proceeds will be used to redeem all or a portion of the 6.25% Junior Subordinated Notes (SOJA).

The issue will be investment grade.

The company has numerous issues outstanding which can be seen here.

The preliminary prospectus can be read here.

EarlyBird got the worm on this one and posits a coupon in the 4.375%-4.50%.

Franchise Group Inc to Sell Preferred

Franchise Group (FRG), an operator of franchised businesses, has announced a new offering of cumulative preferred stock.

The issue will be cumulative and qualified.

I am not familiar with this company, but it looks like they operate vitamin stores, sell furniture and has a tax preparation business. Obviously plenty of due diligence needs to be done on this issue.

The preliminary prospectus can be read here.

mcg was on top of this one with EarlyBird chipping in with ‘yield talk’ around 7.5%.

OFS Capital Prices Baby Bonds

Business Development Company OFS Capital (OFS) has priced their new issue of baby bonds.

The issue priced at 6.25% which at first glance seems low–but the issue is just a 3 year issue, maturing in 2023 and shorter dated maturities price lower.

There will not be OTC grey market trading. The issue should begin trading in the next week or so.

The pricing term sheet can be read here.

Brookfield Infrastructure Partners Prices Preferred Issue

Brookfield Infrastructure Partners (BIP) has priced there new preferred unit offering.

The issue priced at 5.125%–about where the guesses were at yesterday.

The issue is investment grade–although low investment grade at BBB- from S&P.

This issue should trade immediately under OTC grey market ticker BIPPF. I plan to buy a taste of this issue for a long term holding.

The pricing term sheet can be read here.

Wesco International to Make 1st Juicy Dividend Payment

Wesco International (WCC) which merged with Anixter International earlier his year is about to make their 1st dividend payment on the juicy 10.625% fixed rate reset cumulative preferred on the 30th of the month.

The WCC-A issue went ex-dividend today for around 73 cents–the first payment is for slightly over 3 months.

The company is a giant in the business to business distribution and supply chain business with revenue now in the $17 billion area.

You can be certain there is plenty of risk in Wesco as they are rate B1 by Moodys and BB- by Standard and Poors. You can read S&P’s take on the combined companies.

I only mention this issue because depending on your risk tolerance this may be a reasonable holding. The reset period isn’t until 6/22/2025 so at 10.625% there is plenty of ‘meat on the bone’ yet even though shares closed at $28.30 today.

Disclosure–I hold a position in this issue which I bought in the $26.90 area.

Brookfield Infrastructure Partners to Sell Preferred Issue

Canadian company Brookfield Infrastructure Partners (BIP) has announced a new issue of $25 preferred stock units (called units not stock if issued by a partnership).

This is a quality issue, but will come with a K-1 at tax time since it is a partnership.

BIP owns power generation, transportation assets, cell towers and other critical assets.

Yield talk is in the 5.25% area.

The preliminary prospectus can be read here.

EarlyBird was right on this one. Potter followed up with a likely BBB- rating.

BDC OFS Capital to Sell Baby Bonds

Business Development Company OFS Capital (OFS) will be selling a new issue of $25 notes.

The company already has 3 issues outstanding with coupons ranging from 5.95% to 6.50% and you can see them here. All issues are trading substantially under $25.

The preliminary prospectus can be read here.

Fabrib was right on this one with EarlyBird noting ‘yield talk’ at 6.125-6.25% with a Egan-Jones BBB- rating.

Monday Morning Kickoff

Trading in a range of 3310 to 3426 and closing at 3341 last week the Sp500 had a holiday shortened week loss of about 3%.

The 10 year treasury moved in a range of .66% to 72% and closed the week at .67%. Rates continue to hold fairly steady in spite of massive government borrowings–liquidity everywhere looking for a home. Plenty of bank liquidity and banks have had to do little to no repurchase agreements to garner cash.

The FED balance sheet fell by $7 billion last week–once again continuing the saw tooth pattern we have seen since early July.

The average $25 preferred stock and baby bond barely budged last week as the average issue was higher by 3 cents. No sector moved much–CEF preferreds were flat, utility issues fell 7 cents, banks were up a dime, investment grade issues were up 7 cents and the lodging REITs were up 15 cents.

Last week we have 4 new income issues come to market.

American Financial Group (AFG) came to market with a 4.50% baby bond. We haven’t seen trading in this issue yet, although we would expect it this coming week.

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First Republic Bank (FRC) came to market with a 4.125% perpetual preferred issue. We see a OTC grey market closing trade at $25 on Friday–plenty of yield hungry folks even at 4.125%.

Small Virginia banker MainStreet Bancshares (MNSB) came to market with a 7.50% perpetual preferred. No OTC grey market ticker has been announced.

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Lastly Capital One Financial (COF) sold a new 4.625% perpetual preferred issue. The issue is trading on the OTC grey marekt last trading at $24.67.

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MainStreet Bancshares Prices Preferred

As predicted by some yesterday small Virginia community bank MainStreet Bancshares (MNSB) has priced their new preferred offering at 7.50%.

They are selling 1 million shares with an over allotment available of 150,000 shares.

The issue is non-cumulative and is not rated.

Make sure to understand the risk/reward with this issue–presently 22.5% of their loan portfolio is in ‘deferral’–so you can be fairly certain they will be taking large write downs in the near future.

The pricing term sheet can be read here.

Capital One Financial Prices Preferred

Capital One Financial (COF) has announced pricing for their new preferred stock issue.

The coupon will be 4.625%. The issue is non-cumulative and split investment grade (IG from Moody’s-non IG from S&P).

The issue will have early redemption available 12/1/2025.

The issue will trade immediately on the OTC grey market under ticker COFKL.

The pricing term sheet can be read here.

Capital One Financial to Sell New Preferred

Not to be left out of the gravy train of low coupon preferreds Capital One Financial (COF) has announced a new issue of preferred stock.

The company has numerous preferred issues already outstanding which can be seen here. Only 1 of the issues is near a potential redemption–the 6.20% COF-F issue which can be redeemed on 12/1/2020 (only redeemable on a dividend payment date).

The preliminary prospectus can be read here.

mcg and EarlyBird were on this one. ‘Yield Talk’ is in the 5% area (likely a little less).

MainStreet Bancshares to Issue Preferred

Another smaller community banker is getting on the preferred stock issuance train.

Virginia community banker MainStreet Bancshares (MNSB) will be selling a new non-cumulative perpetual preferred.

Note that this is a pretty tiny bank with $1.5 billion in assets.

Also note that the company offered a payment deferral program to their customers during the Covid 19 pandemic and 22.5% of their outstanding loans are now in deferral–likely this could get ugly as time passes. Read their latest release here.

‘Talk’ is they will be selling around 1 million shares in the 7.375 to 7.50% area which would be comparable to what the other small bankers selling preferreds have priced around.

The preliminary prospectus can be found here.

mcg was right on this one.

First Republic Bank to Sell New Preferred

Private banker First Republic Bank (FRC) will be selling a new non-cumulative preferred stock issue.

At the same time the company announced the new offering, they announced they would be calling for redemption their series F issue (FRC-F) 5.70% issue which became redeemable on 6/30/2020.

The issue will be investment grade so I am looking for a coupon in the 4.25 to 4.50% area.

FRC has a number of other issues outstanding which can be seen here.

FRC is regulated by the FDIC and thus they do not file with the SEC, but you can see data on their website on this new issue.

Thanks to mcg for catching this issue.

American Financial Group Prices Baby Bonds

American Financial Group Inc. (AFG) has priced their previously announced baby bonds.

The bonds priced at 4.50%. These are rated BBB- by Standard and Poors and Baa2 by Moodys.

Shares will trade in the next week or so under the ticker AFGE. Being a baby bond there will not be OTC grey market trading.

The pricing term sheet can be read here.

American Financial Group to Sell Baby Bonds

Insurer American Financial Group (AFG) will be selling a new issue of baby bonds.

Like all of the AFG baby bonds they have the right to defer interest payments for up to 5 years without a default.

The issue will be rated investment grade by Moodys and Standard and Poors.

The subordinated debentures will likely be listed under ticker AFGE, which is an old ticker that has been used before–the previous issue was called in 12/2019.

The company mentions a possible redemption of their 6% baby bonds (AFGH) which become callable on 11/15/2020.

You can see the various AFG issues now outstanding.

The preliminary prospectus can be read here.

mcg was right on this one.

Tuesday Morning Kickoff

Finally we saw a downdraft in common shares last week as the S&P500 traded in a range of 3350 to 3588 and closed Friday at 3427–a drop from 3508 the previous Friday.

The 10 year treasury traded in a range of .61% to .74% before closing at .72%–close to where it closed the previous Friday. We had a employment report that appeared to be positive, but with seasonal adjustments and hiring for the census and other factors I don’t think anyone has a real clue as to what is happening in the employment arena.

The Fed Balance Sheet rose by $27 billion last week. This continues the sawtooth pattern that has been going on for the last 2 months as plenty of liquidity continues to slosh around the globe. There has been virtually NO REPO action from the FED for months and that continues.

The average $25/share baby bond and preferred stock fell by 26 cents last week. We have rarely seen share prices fall this year, but a combination of common stocks tumbling, plus a large number of ex-dividend dates happening in September set up the move modestly lower. Investment grade moved 24 cents lower, utilities moved 22 cents lower, banks 21 cents lower and mREITs moved 38 cents lower. The only sector moving higher were CEF issues which moved 5 cents higher.

We had 2 new income issues priced last week.

Sachem Capital (SACH) priced a new issue of baby bonds with a coupon of 7.75%. I see this new issue set to trade today or tomorrow most likely.

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Also B Riley priced a new issue of perpetual preferred shares with a coupon of 7.375%. There has been no OTC grey market ticker announced–I assume it will go straight to NASDAQ trading.

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