9/19/2024
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The Gabelli Equity Trust (GAB), a closed end fund, has announced the pricing of their new issue of perpetual preferred stock.
As the SEC paperwork has not been filed many details are unknown–we will post details when they are released.
The issue prices at 5%. 4 million shares are being sold.
It is most interesting that since the FED claimed they are on hold until we see inflation news, markets are not paying too much attention at all to them.
They began meeting today and tomorrow they will make an announcement on the Fed Funds Rate–certainly any change, in any direction, would be one heck of a surprise to everyone.
Just watching the 10 year treasury–while no one is talking much on the meeting it is certain the bond traders are waiting for the official ‘news’–which will be no news.
The 10 year treasury opened the week at 1.83% and hasn’t moved more than 2 basis points in either direction in 2 days–that is pretty unusual.
Personally I have barely peaked at the personal accounts–although moments ago I looked for the 1st time today and there is some upward creep–I’m talking a few cents–maybe a dime in an issue or two and as always I am just fine with quiet markets–certainly excitement of some sort will come before the month is out.
Gabelli Equity Trust (GAB) has announced the sale of a new issue of perpetual preferred stock.
The CEF had already announced the redemption of the GAB-D 5.875% issue for 12/26/2019. With the new issue the company will have 4 issues outstanding–none of which have coupons above 5.45% and this one is not redeemable until 2021.
Outstanding issues can be seen here.
Of course being a CEF and needing to have at least 200% asset coverage ratio this will be a high quality issue.
When we could last accurately calculate the leverage GAB was at 465% (6/30/2019). Being that their assets are level 1 (directly observable prices–i.e. common stocks) investors should feel fairly secure here.
The issue will likely be unrated–they were last rated by Moodys at A1, but now they are unrated. I will need to update lists etc for this change (as well as check other Gabelli CEFs).
The preliminary prospectus can be read here.
EarlyBird and mcg were right on this new issue.
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.
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.
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.
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.
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.
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.
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.
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 (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.