1/10/2025
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After just selling a new baby bond on 10/19/2022 with an 8% coupon, business development company Saratoga Investment (SAR) has announced they will be selling another baby bond.
The company has 2 other issues outstanding which can be seen here.
The preliminary prospectus can be read here.
J was on this one as well.
Insurance/annuity company Athene Holdings has announced a new issuance of fixed rate reset preferred stock. Athene is owned by Apollo Global Management (APO)
The company has other issues of preferreds outstanding which can be seen here.
This new issue should be investment grade. The coupon will be fixed until 12/30/2027 after which it will be reset at the 5 year treasury plus a yet to be announced ‘spread’—then every 5 years thereafter.
The preliminary prospectus can be read here.
J was on top of this one.
Well we had economic news last week that was pretty mixed–again. Consumer confidence was just a bit better than forecast–ADP jobs were soft–much softer than forecast at 127,000 new jobs versus 190,000 forecast. GDP for the 3rd quarter was revised upward to 2.9% versus 2.7% forecast. The official government employment report was much stronger than expected at 263,000 new jobs versus 200,000 expected. PCE inflation was about right on target while the Purchasing Managers Index and the Institute of Supply Managers index were both weaker than expected.
Regardless of the mixed economic news Jay Powell sent a message of a potential slowing in interest rate hikes–markets heard that the slowing was a ‘done deal’. Interest rates (the 10 year treasury) pushed lower before shooting higher on the government jobs report and finally tumbling once again to close the week at 3.51% which was 18 basis points lower than the 3.69% close the previous Friday. This morning the 10 year treasury is at 3.52%.
This week we have many economic reports, but no single item likely to move markets except for producer prices (PPI) on Friday. There are not any Fed speakers this week as they are in a ‘quiet’ period ahead of next weeks FOMC meeting.
Last week the S&P500 rose 1.2% although the index traded in a 4% range with economic news helping to contribute to the the wide swings.
The Fed balance sheet moved lower by $37 billion as the runoff of assets continues at a $95 billion monthly rate.
The average $25/share preferred stock and baby bond moved higher by almost 1%–up 21 cents. Investment grade issues moved up 19 cents with banks up 23 cents. mREIT preferreds moved up just a dime.
Last week we had 1 new income issue priced. BDC Runway Growth Finance (RWAY) priced a new baby bond with an 8% coupon. The issue will trade under ticker RWAYZ – the issue has not yet begun trading.
Well we started off with a stronger than expected employment report at 7:30- a.m. which sent stocks into a tail spin and interest rates higher. Well so much for that – stocks were flat. Interest rates have done a huge round trip from starting at 3.50%ish then going to 3.63% and now back down in the 3.50% area.
My expected losses in my accounts didn’t materalize so I couldn’t add to my Customers Bancorp FTF (CUBI-F) preferred position (price was too high). I’m determined to pay only $25 for these as they are currently redeemable–they are now trading at $25.25–no thank you. I did go ahead and add to my Customers Bancorp 5.375% baby bond position (CUBB)–current yield of 6.54% with a yield to 1st call of 8.92%.
So we head into the weekend folks may still be looking for the highest quality issues with the best current yield or yield to 1st call–so here is another Google Sheet which is just an alphabetical listing with the ‘Investment Grade’ sorting tab—1 click and all the investment grade issues appear. This sheet is downloadable by users.
Well we had a good run lately, but today reality comes home to roost and it looks like we will doing a little giving back today.
The 10 year treasury which was at 3.51% before the employment number was released jumped to 12-13 basis points when new jobs for November jumped by 263,000 versus expectations of 200,000. The unemployment rate held steady at 3.7%.
So with this jump in new jobs it is highly likely we will see maybe a 1/2 to 1% giveback in the average income issue—this too shall pass. A good day to observe or maybe if a target issue on your watch list drops a little bit one can pick up some shares.
At this point this singular number will not change my expectations for a 50 basis point rate hike in December–BUT there will be a CPI report on the 1st day of the FOMC meeting—so nothing is 100% for sure–in spite of Powell’s near promise this week to back off increases.
Such is life–always something to worry about.