Tim McPartland | Innovative Income Investor

Allstate Calls ALL-A

Thanks to Zwei, who posted in the Reader Initiated Alerts page, we have now seen the official notice of redemption of the ALL-A, 5.625% perpetual preferred being called.

The issue is being called 1/15/2020 which is the next dividend payment date (Allstate preferreds can only be redeemed on a dividend payment date).

It is always amazing that even after the company signaled that they might redeem the ALL-A issue investors kept trading the shares with little caution as it had closed last week right at about $26. Yesterday it fell to $25.77. Only 2 months ago it traded around $26.70.

It is fine to own some potential call candidates, I certainly do, but giving away 1-2% or even more, at this stage is probably a bit silly–I mean ALL sold their last preferred issue with a 4.75% coupon.

The official notice is here.

WR Berkley Prices Baby Bonds

WR Berkley (WRB) has priced their new issue of subordinated debentures with a fixed rate coupon of 5.10%.

The issue is investment grade.

Maturity is way out in 2059, with an early redemption period starting in 2024.

There will be no OTC market trading, but one may be able to purchase shares (bonds) prior to exchange trading with a call to the brokerage with the CUSIP.

The company can defer interest payments for up to 5 years multiple times without it being declared in default.

The pricing term sheet can be seen here.

Insurer WR Berkley to Sell Baby Bonds

WR Berkley (WRB) has announced an offering of baby bonds.

The bonds will have a maturity in 2059 with an early call period starting in 2024.

WRB has a number of other baby bonds outstanding–1 of which carries a 5.625% coupon and is now callable (WRB-B)--it can be seen here.

The company has not announced a call on the above issue–the ‘use of proceeds’ statement on the new issue says ‘to be used for general corporate purposes’, but I believe they will call the WRB-B issue for 1/31/2020.

Disclosure–I hold the WRB-B issue. It is trading at $25.28 –right about where it should be with accrued interest (assuming about a 30 day notice). If I am right on predicted call date it has 7 cents worth of potential ;eft.

The preliminary prospectus can be read here.

EarlyBird is the ‘early bird’ on this issue.

Monday Morning Kickoff

The S&P500 moved in a range of 3070 to 3150 before closing the week at 3146–a gain of almost 2%.

The 10 year treasury moved in a range of 1.73% to 1.86% and closed the week at 1.84%.

The Fed Balance Sheet moved higher with $13 billion added to holdings. The previous week was $22 billion higher (just released also because of the holiday). This is a 2 weeks addition of $35 billion to the balance sheet.

There were a number of new issues announced last week.

SVB Financial (SIVB) announced a new preferred stock offering. It is now trading on the OTC Grey Market and last priced at $25.16.

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Customers Bancorp (CUBI) announced a new fixed rate debt issue with a coupon of 5.375%. This issue is not yet trading and the ticker is not know as of yet.

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Ford Motor Company (F) announced a new baby bond with a fixed rate coupon of 6.00%. The issue is not yet trading, but some folks have been able to buy through their brokers on the bond desk.

AT&T (T) announced and priced a new perpetual preferred stock with a fixed rate coupon of 5.00%. The issue is now trading on the OTC Grey market and last priced at $24.92.

Lastly, very late Friday non traded REIT Healthcare Trust Inc. announced pricing of a new perpetual preferred at a tasty 7.375%. The issue has not traded (that we could see), but should do so today (Monday) under OTC ticker HLTCP.

Healthcare Trust Inc, Prices Perpetual

Untraded healthcare REIT Healthcare Trust Inc. priced their previously announced perpetual preferred late Friday.

The issue priced at a fixed rate coupon of 7.375% and is cumulative, but non qualified. This is a rather small issue so it will be interesting to see how much demand there is for a high yield issue, since we have seen so many low coupon issues recently.

The issue should trade today (Monday) on the OTC Grey Market under ticker HLTCP.

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The final prospectus can be seen here.

WOW–What Job Creation!

In spite of my own skepticism with the various organizations (government and others) releasing jobs numbers it is hard to be negative on job growth.

266,000 jobs simply blew all predictions out of the water, and the last couple of months were revised upward.

Compared to the ADP report of +67,000 jobs in November the government number is simply crazy. Whether either employment report is correct is up for debate I suppose, but I learned long ago that guesses by forecasters are worth absolutely nothing. One thing is almost for sure–there is no recession in the near future.

The equity market are up about 1/2% on the news while the 10 year treasury is up about 6 basis points to 1.855%.

Contrary to previous employment reports we can’t say “this brings the Fed back in play”—at least if we take them at their word without inflation they will not hike rates–and certainly the employment report is not supportive of cutting rates.

AT&T Prices Preferred Issue

AT&T (T) has priced their previously announced perpetual preferred stock.

The coupon is fixed at 5.0% for 48 million shares.

The issue is split investment grade with only Standard and Poor rating the issue investment grade.

The dividends are cumulative and qualified.

The issue will trade on the OTC Grey Market right away.

The pricing term sheet can be found here.

Just in Case–Get That Seatbelt Fastened

Tomorrow we will have the monthly employment report released.

I see that after a bit of a soft report in October with a 128,000 new job numbers the consensus for November is 180,000 new jobs.

ADP released a 67,000 non farm number for November on Wednesday–that is a damned sight lower than 180,000.

So we all know that these numbers are many times in conflict–and in the end, irrespective of what you believe, the marketplace takes the government report as the ‘official’ employment report, typically ignoring ADP.

One thing is almost certain–if ADP is correct we will likely see a sharp move lower in stocks and a 5-10 basis point move lower in the 10 year treasury–recession talk would be back on the table.

Of course my predictions are worth less than a cup of coffee–BUT just in case I am buckling up at 7:25 a.m. tomorrow.

HealthCare Trust Inc. Announces a New Perpetual Preferred

Non-publicly traded healthcare REIT Healthcare Trust Inc. (not to be confused with Healthcare Trust of America which is ticker HTA) has filed to sell a new issue of preferred stock.

The official preliminary prospectus has NOT been filed yet with the SEC, but the company press release can be found here.

Additionally the company has a new presentation filed with the SEC and it indicates a potential coupon of 7.375% on this new issue. The presentation can be found here.

I like the look of the coupon, but being non traded I am skeptical–more due diligence will be required before I have an interest.

EarlyBird got the worm again on this one posting it to the Reader Initiated Alerts page about an hour ago.

AT&T Announces a New Perpetual Preferred

Giant Telecom AT&T (T) has announced the issuance of a new perpetual preferred stock.

This will be the 1st perpetual preferred issue for the company as far as I can find. They do have some global notes outstanding which can be seen here. Additionally there are 2 3rd party issues outstanding (KTBA and GYC) which we do not cover at this time.

The issue will have an early redemption date starting in 2024. Other terms appear to be fairly typical for a perpetual preferred—cumulative and qualified with quarterly payments.

The preliminary prospectus can be read here.

Thanks to EarlyBird for being the early bird on this one.