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Tumbling Rates Not Providing ‘Lift’

Yesterday interest rates took a bit of a tumble, but overall preferreds and baby bonds didn’t move at all. Patience is required at this time to see increases in pricing.

As income investors we all want our holdings to move higher when rates move lower, but the truth is that price movement, in particular in the high quality, low coupon issues, takes time. We have had days where prices have moved sharply–one way or the other, but normally (on average) prices just move a nickel or dime per day.

Earlier this year as interest rates rose sharply we had large downward movements in prices/share and now we have had a nice 5-6% increase in prices in the last few months as interest rates have reversed to the current 3.40% level (on the 10 year treasury) from the 4.35% area. Now we may be at the point where interest rates move in the 3.30% to say 3.75% range. Movement within this range will produce limited movements in preferred stocks and baby bond prices—and that is fine with me. Locking in decent current yields and yields to maturity is going to pay huge rewards – over time — not by tomorrow, but next year and the year after.

So my point is to simply keep your nose to the grindstone – find a decent investment every week or two and then lock in that 6.5% yield on investment grade issues and hold it for years. Lock in that nice 7-8% yield on mid grade issues and hold them for years. The current yields and the yields to maturity (at 10-15% on many issues) can make you pretty wealthy.

Headlines of Interest

Below are some press releases from company’s that have preferred stock or baby bonds outstanding.


Global Ship Lease Announces Results of 2022 Annual Meeting of Shareholders

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Priority Income Fund Announces 11.1% Annualized Cash Distribution Rate (on Class R Offering Price) Through Board Declarations of Increased Quarterly Cash “Bonus” Common Shareholder Distribution in Addition to Steady Monthly Cash “Base” Common Shareholder Distributions for December 2022 through February 2023 and Preferred Stock Distributions for December 2022

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Newtek Secures Approximately $300 Million in Debt Financing to Further its Growth and Objectives for 2023


Diana Shipping Inc. Announces Sale And Leaseback of m/v DSI Andromeda and Time Charter Contract for m/v DSI Pegasus With Reachy

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Triumph Financial, Inc. Announces Preliminary Results of Tender Offer

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Armada Hoffler Announces Closing of $100 Million Fixed-Rate Unsecured Term Loan

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Ellington Financial Declares Common and Preferred Dividends


Global Medical REIT Inc. Board Declares 2022 Fourth Quarter Common and Preferred Dividends

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Ellington Residential Declares Monthly Common Dividend

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Allstate Announces Preferred Stock Dividends

Hennessy Advisors, Inc. Reports Annual Earnings

Oxford Lane Capital Continues Selling Common Shares

Specialty finance company and closed end fund Oxford Lane Capital (OXLC) continues to sell plenty of common shares and they have released their latest update to sales.

With the share price at $5.11 which is a premium to the net asset value (NAV) of $4.79-$4.89. With 163.5 million shares outstanding I would expect in 2023 the company will reverse split the shares at 1 for 3—this will keep them out of penny stock territory (under $5/share).

The update is here.

Stocks Weak Again

The S&P500 is off a total of 3.2% so far this week–and thus far this morning futures are off about 2/3 %. I think stocks are coming around to the conclusion that the economy will weaken substantially from here–interest rates of course have been signaling this for some time now. The common share selloff has been nice and orderly–whether markets are up or down, just like interest rate movements, as long as price movements remain orderly I am calm.

We have only a few economic numbers today. We have ‘revisions’ to unit labor costs and productivity at 7:30 am (central) and late in the day we have consumer credit growth announced. These typically wouldn’t move markets, but they will be scrutinized closely this time around–unit labor costs and productivity for inflation contributions and consumer credit for growth beyond expectations. Consumers are leaning heavily on credit which may come back to haunt them later depending on general economic conditions.

So I will likely continuing on the side lines in terms of new buys–just no cash available yet. I am fine just watching while my money works for me–every month I am rewarded with dividends and interest and December is a big month.

Headlines of Interest

Below are some press releases from company’s that have preferred stock or baby bonds outstanding.

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Midland States Bancorp, Inc. Announces Authorization of New $25 Million Stock Repurchase Program


Oxford Lane Capital Corp. Provides November Net Asset Value Update


Soluna Holdings, Inc. Provides Corporate Update


Applied UV, Inc. Launches 40% Off Winter Sale to Help the $33 Billion North American Cannabis Market Prosper

NexPoint Diversified Real Estate Trust Announces Preferred Share Distribution

NexPoint Diversified Real Estate Trust Announces Preferred Share Distribution

Arlington Asset Investment Corp. Declares Fourth Quarter 2022 Dividends on Preferred Stock

Lumen Invests to Expand U.S. Intercity Network by 6 Million Fiber Miles