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No Headlines This Week

For this week I will not be publishing ‘headlines of interest’. I am on the road this week and thus am working only on my chromebook which leaves me with very limited capabilities compared to my windows desktop which I generally use for almost all of my postings.

I am taking a few days off which are the first I have taken since last August, but will be back to normal next week.

Weekly Kickoff

Well last week ended up near flat in the equity markets – with the S&P500 down a measly 15 basis points. The index was driven higher during the course of the week by over 1% as the market decided that hotter than forecast inflation number were ‘good news’.

Interest rates rose about 22 basis points on the week–closing at 4.30%. Rates traded in a 4.07% to 4.3% range with the inflation numbers kicking rates higher. This week we have the FOMC meeting starting Tuesday afternoon, but what was originally expected (a few months ago) to be a rate cutting meeting is now likely to be a ho-hum meeting. I will say it will be kind of interesting to see what Jay Powell has to say at the presser on Wednesday for hints at a future rate cut.

After 3 weeks of sharp drops in the Fed balance sheet assets by the stated goal of a $95 billion runoff we saw assets rise by $3 billion last week. The balance sheet now stands at $7.54 trillion—down from an all time high near $9 trilion. Isn’t it interesting how higher interest rates have stimulated demand for all the treasury paper being issued. We’ll see where this goes over time.

Last week as one would expect the average $25/share preferred and baby bond fell in price by 16 cents–honestly it could have been much worse given the rise in interest rates.

Investment grade issues fell by 18 cents, banking issues by 17 cents, mREIT issues rose 3 cents and shippers rose 6 cents. So we had the high quality low coupon issues falling much more than the low quality high coupon issues.

Last week we had one new issue price as asset manager Affiliated Managers (AMG) sold a new baby bond with a 6.75% coupon. This issue is not yet trading–but may trade before the week is out. Investors the feel they need to buy this issue ASAP you will need to call the bond desk at your broker.

Headlines of Interest

Below are press releases from companies with preferred stock and/or baby bonds outstanding

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Alta Equipment Group Announces Fourth Quarter and Full Year 2023 Financial Results and Provides Adjusted EBITDA Guidance for 2024

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Pyxis Tankers Announces Financial Results for the Three Months and Year Ended December 31, 2023

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Mortgage Rates Continue to Decrease

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Stonepeak Completes Acquisition of Textainer

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Textainer Closes Acquisition by Stonepeak and Announces Post-Acquisition Redemption of All Preference Shares and Related Depositary Shares

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STIFEL TO ACQUIRE FINANCE 500 and CB RESOURCE


Cherry Hill Mortgage Investment Corporation Announces Common and Preferred Dividends for the First Quarter 2024

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Annaly Capital Management, Inc. Announces 1st Quarter 2024 Common Stock Dividend of $0.65 per Share


Babcock & Wilcox Enterprises Reports Fourth Quarter and Full Year 2023 Results

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AM Best Downgrades and Withdraws Credit Ratings of Conifer Holdings, Inc. and Subsidiaries

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AM Best Assigns Issue Credit Ratings to MetLife, Inc.’s New Senior Unsecured Notes

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AM Best Assigns Credit Ratings to Arch Group Reinsurance Ltd.

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Schwab Reports Monthly Activity Highlights

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Granite Point Mortgage Trust Inc. Announces First Quarter 2024 Common and Preferred Stock Dividends

Affiliated Managers Announces New Baby Bond

Asset manager Affiliated Managers (AMG) has announced a new issue of baby bonds.

The terms are fairly typical, but the notes will have the ability to defer interest payments on one or more periods for up to 20 quarters without a default being declared.

This issue should be investment grade (BBB-/Baa1)

AMG has 3 baby bonds outstanding as well as a trust convertible which can be seen here.

The preliminary prospectus is here.

Thanks to J for being on top of this one.

Awaiting Inflation Numbers

Always waiting on something–this time the producer price index (PPI)–interest rates are already up and trading around 4.2% based on the hotter consumer price index announced on Tuesday. So far no real damage done to income issues, but who knows when markets will react. We also have retail sales announced today–a measure of consumer health of sorts–whether equity markets care about any of this is anyone’s guess–‘all news is good news’ seemingly and futures are up decently this morning.

Yesterday I bought additional shares in General American Investors 5.95% perpetual preferred (GAM-B) @ $25.06. This is adding to the safety side of the portfolio–a CEF preferred with over 700% asset coverage. GAM is a plain vanilla CEF owning level 1 assets (level 1 assets are securities where prices are directly observable i.e. stocks and bonds). The portfolio is balanced between high quality issues at 6% or so (on cost) and more marginal issues in the 8% area—all in all 7% more or less. Of course this is just the stocks and baby bonds we own–bunches of the portfolio is CDs etc in the 5-5.6% area.

I mentioned yesterday (or was it Tuesday?) that the current market has been most pleasing to me. I can buy investment grade issues in the 6 or even 7% area, I can get junkier (but decent) issues in the 8% area or I can choose to be in money markets or CDs at 5-5.6% area. For a conservative investor this is the best selection of yielding investments we have seen in years and years. This doesn’t mean I am a super bullish person–like of all of you I see the challenges in the economy and certainly in the government. The last time I didn’t worry about markets was on the Thursday before black Monday in 1987—and then Monday came and all of us were ‘educated’ to what ‘could’ happen. I have found that you can worry–but at the same time understand that burying your money in the backyard is not a viable option.

So I am looking for more issues to buy. I a pondering a taste of one of the Priority Income Fund term preferreds and also 1 more BDC baby bond–I looked at Whitehorse Finance baby bonds–they are OK, but their net asset values have been falling at a rate higher than many competing company’s – we’ll see. Many, many CDs maturing tomorrow and then again on the 22nd–some $$ will get ‘rolled’, but some will need a new home.

Headlines of Interest

Below are press releases from companies with preferred stock and/or baby bonds outstanding–or just news of general interest.

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Fitch Upgrades Kite Realty Group Trust’s Rating Outlook to ‘Positive’ from ‘Stable’

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Portman Ridge Finance Corporation Announces Fourth Quarter and Full Year 2023 Financial Results

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New York Mortgage Trust Declares First Quarter 2024 Common Stock Dividend of $0.20 Per Share, and Preferred Stock Dividends

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Fossil Group, Inc. Reports Fourth Quarter and Fiscal Year 2023 Results

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SuRo Capital Corp. Reports Fourth Quarter and Fiscal Year 2023 Financial Results

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Hearing Date Set for Brookfield Reinsurance Acquisition of AEL

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Chatham Lodging Trust Declares Quarterly Common, Preferred Dividend

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AM Best Assigns Issue Credit Rating to Prudential Financial, Inc.’s New Junior Subordinated Notes

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Global Indemnity Group, LLC Reports Year Ended 2023 Results

Higher for Longer?

Who knows where interest rates are going? It has been soundly proven that the answer to this question is NO ONE. Now as I watch my early morning CNBC allotment (I only watch from 4 a.m. until 8 a.m CDT) I see a new theory is popping up–we can grow the economy just fine with rates in the current area–or maybe just slightly lower. I think we have all noted that the amount of ‘dry powder’ available to be spent is massive–money markets, CDs and treasuries–by spending I mean spending on goods and services and/or investing in the equity markets. When/if interest rates move lower will the ‘dry powder’ move to equities–or will folks simply spend the money on goods and services? As I said no one knows where rates are going or what will happen to the economy—the same ‘smart people’ who entered the year predicting 6 rate cuts are now saying maybe 2—these people make millions of dollars a year ‘throwing darts’, but have no clue.

Anyway inflation numbers came in hot yesterday and as I expected markets moved–of course instead of tumbling the equity markets zoomed higher–all news is good news I guess. Interest rates initially held flat after the announced inflation before moving higher–closing around 4.16% (the 10 year). This move was mild–really making little difference in share prices of preferreds and baby bonds. Of course we have to do the whole ‘routine’ again tomorrow with the release of the producer price index (PPI) and retail sales numbers.

Yesterday I did nothing in the markets, but expect to do some buying today and/or tomorrow. As all of us know it has been ‘forever’ since we could get a 5% CD–and I am really loving it. To do some due diligence in preparation to make equity buys takes a bit of effort–hell it is easy to do a couple clicks and buy a 5% CD. I am loving the ability to put together a truly diversified income portfolio with some laddered CDs, some high yield baby bonds (i.e. BDCs) and some super safe CEF preferreds—I don’t remember a time this century that presented such an opportunity. Maybe I am getting too complacent.

Today we have no scheduled economic news of consequence. Interest rates are flat around 4.16-4.17% (the 10 year) and of course equity futures are up a bit, although not much. Maybe a super quiet day? We’ll see soon!

Headlines of Interest

Below are press releases from companies with either preferred stock or baby bonds outstanding–or just news that may be of interest.

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Athene USA Tops Rankings for Annuity Sales, Pension Group Annuity Volumes

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Apollo Commercial Real Estate Finance, Inc. Announces 2024 Annual Meeting of Stockholders

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Apollo Commercial Real Estate Finance, Inc. Declares Quarterly Common Stock Dividend

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Pyxis Tankers Announces Date for the Release of the Fourth Quarter and Year Ended 2023 Results and Related Conference Call & Webcast

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Synchronoss Technologies Reports Fourth Quarter and Full Year 2023 Results


Oxford Square Capital Corp. Schedules Fourth Quarter 2023 Earnings Release and Conference Call for March 15, 2024

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Abacus Life to Announce Fourth Quarter 2023 Financial Results on Thursday, March 21, 2024

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U.S. Bancorp announces quarterly dividends

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JPMorgan Chase to Host First-Quarter 2024 Earnings Call

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Dynex Capital, Inc. Declares Monthly Common Stock Dividend of $0.13

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Global Partners Unveils New Brand Identity with Focus on Commitment to Innovation and the Energy Transition

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RLJ Lodging Trust Announces First Quarter 2024 Earnings Release and Conference Call Dates

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LuxUrban Hotels Schedules 2023 Fourth Quarter and Full Year Financial Results and Conference Call

Well Let’s Get This Big Day Going!!

Well, we know that in 30 minutes we will have the announcement of the latest consumer price index (CPI) and it better be right on the forecast or we could see some fireworks–whether it is up or down can’t be forecast, but the investing public knows exactly what the Fed wants to see–the Algo’s will no doubt exaggerate any movement in the equity markets. As always I prefer that markets do nothing–steady as you go. The core rate of inflation is forecast at up 3.7% (year over year) with the headline CPI itself up 3.1%–who knows for sure (certainly not me). My opinion is no rate cut in March–so don’t think this number will be of consequence.

Equity futures are mixed this morning–DJIA is flattish, NASDAQ is up a decent amount and of course with NASDAQ the S&P500 is up 1/3%. The 10 year treasury is at 4.09%–pretty much dead flat. This is one of those days where we could see a 10 basis point move in interest rates–or we could continue to have a boring market–boring is good.

Well we are about to bid adios to the nice NiSource 6.5% fixed rate reset perpetual preferred (NI-B) which will be redeemed on Friday– so not only are CDs maturing, but I will have a chunk of money from this redemption.

As I mentioned yesterday I would be doing some buying this week–and I did some yesterday. I added to my position in Trinity Capital 7% baby bond (TRINL)–these have a maturity date in January, 2025 so I am just looking for a smooth ride with about a 7% YTM—there will be no capital opportunity here. Additionally I added to my Pennymac Investment Trust 8.5% baby bonds (PMTU) with a maturity out in 2028 so there could be a nice capital gain available in the next year, but that is not expected–8.5% is a good reward. As I mentioned I also ‘rolled’ some money into a September 5.3% non callable CD where I had a rung missing from my ladder. Of course I will add these buys to the ‘laundry list’ of holdings.

So I will continue to look for buys–I may have to initiate a new position in a CEF preferred to balance my high yield basket. I already have quite a bunch of CEF preferreds, but they are full–or even overweight positions and I am not comfortable going to double weighting–even in a CEF preferred.