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Monday Morning Kickoff

Last week the S&P 500 closed last week up 1.64% from the previous Fridays close–a decent week 

Interest rates closed at 3.69% (the 10 year treasury)–which was up a pretty large 23 basis points from the previous weeks close of 3.46%.  This week we have no economic news today (Monday) – but we do have at least 4 Fed yakkers.  We have FOMC minutes on Wednesday–that while old news will get a big reaction.  Personal consumption expenditures (PCE) comes on Thursday which will be news the market will react to strongly.

Last week we saw the Fed balance sheet drop by a healthy $56 billion–honestly I didn’t think the Fed would get the balance sheet worked down that far, that fast.  The balance sheet grew by about $400 billion when the banking ‘crisis’ hit in early March–now darned near ½ of this $400 billion increase has been recaptured through maturity runoffs and repayments of loans by bankers.  At this rate we will see the balance sheet back down to $8.3 trillion which was the low point of the current cycle (of course trillions above just a few years ago) in a couple more months.

Last week we had a bounce up in the average $25/share preferred stock and baby bond with the average price up 33 cents.  Investment grade issues only bounced 12 cents, but banks–in particular the regional and community banks moved up by 87 cents. mREIT preferreds were up 1 penny with shippers down 5 cents

Last week we had Allstate price a fixed rate preferred issue with a 7.375% issue.  The issue is trading strongly at $26 under ticker ALLJL.

Nice Bounces In Banking Issues

Whether it was a regional or community bank both common and preferred shares bounced nicely on Wednesday. Of course the market moved sharply higher on debt ceiling hope–and I suppose we will see equities bounce more as that issue is resolved and we can get back to searching for the ‘recession that never arrives’.

A few issues mentioned here early yesterday bounced sharply higher–before I got around to looking for a buy – but I did initiate 1 new position on the VLYPO 5.5% FTF preferred. I wanted to start a small position in a Zion Bancorp issue – either the FTF ZIONO 6.3% preferred or as suggested by Charles and Arbitrage Trader in comments, the ZIONL 6.95% baby bond, but both shot higher and got away from me–oh well more opportunity will come around soon I am sure. With holdings of 6-7 regional/community bankers I will begin to build the positions larger – maybe starting next week – FOMO (fear of missing out) is building.

I see equity futures are up a tiny amount this morning–maybe after yesterdays rally we will pause and look around. The 10 year treasury closed at 3.58% yesterday–so still no real movement in rates over the last week or two–this is bound to change pretty soon.

I will be out of the office a lot today and tomorrow so I won’t post Headlines of Interest tonight

Headlines of Interest

Below are press releases from company’s that have preferred stock or baby bonds outstanding–or just news of general interest.

Generally a slow news day.

View Press Release

Citigroup Announces $1.25 Billion Redemption of 4.044% Fixed Rate / Floating Rate Notes due 2024 and $1.0 Billion Redemption of Floating Rate Notes due 2024

View Press Release

The Hartford Declares Quarterly Dividends Of $0.425 Per Share Of Common Stock And $375 Per Share Of Series G Preferred Stock

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Scorpio Tankers Announces Repurchases of Its Common Shares

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Atlanticus Announces Approval of Quarterly Preferred Stock Dividend

View Press Release

Qurate Retail, Inc. Declares Quarterly Cash Dividend on 8.0% Series A Cumulative Redeemable Preferred Stock

View Press Release

State Street Corporation Declares Dividends on Its Non-Cumulative Perpetual Preferred Stock Series “D”, “F”, “G” and “H”

On the Hunt Again

Each day that passes gives me a little more confidence that we may be near the end of the banking crisis—not there, but getting nearer.  Of course we always have plenty of issues to worry about–the debt ceiling and government spending, but let’s face it we won’t have a time where we can’t find something to worry about.

Last night I was working on the fixed-to-floating rate preferred stock page and noting the great bargains that are out there–or should I say ‘potential’ bargains.  3 issues in particular caught my eye.  Valley National 5.50% FTF (VLYPO) with a current coupon of 8.91%, current yield of 12.05% and of course a yield to worst of over 26%.  Zions Bancorp 6.3% FTF (ZIONO) with a current coupon of 9.58%, current yield of 11.79% and yield to worst in the 20% area.  Lastly the Goldman Sachs 5.50% FTF (GS-J) with a coupon of 8.98%, current yield of 8.99%, but with much more safety has a yield to worst of just around 9%–I suspect this issue will be called soon.  NOTE–the FTF spreadsheet calculates the coupon with real time 3 month libor–the GS issue just became floating so no dividend has been paid since entering the floating rate period.  The spreadsheet calculates the ‘potential’ coupon–the actual coupon only is known on the dividend determination date for each issue.

I am not recommending anyone buy any issue mentioned here–but I may just nibble in a very small way before the week is out.

Interest rates are still quiet today–3.51% on the 10 year treasury this morning–not much movement this week and this will probably remain true through the end of the week.  Next week we have more consequential economic news so markets should move.  We have Powell’s favored inflation gauge on the 26th (Friday)–personal consumption expenditures (PCE) data and with the FOMC meeting approaching that will be a huge number.

So let’s get going on the day.

Headlines of Interest

Below are press releases from company’s with preferred stock or baby bonds outstanding–or just news of general interest.

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Harbor Custom Development, Inc. Announces Pricing of $10 Million Public Offering

Consumer Trade-Offs

Consumer Trade-Offs Send US Discretionary Retail Spending Down 7% in April, Reports Circana

View Press Release

XA Investments Publishes New White Paper on Farmland Investing

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RLJ Lodging Trust Successfully Refinances $600 Million Senior Unsecured Credit Facility and $225 Million of Term Loans

View Press Release

Soluna Holdings Reports Q1 Results

View Press Release

U.S. Bancorp Announces Plan to Transition Outstanding U.S. Bancorp-Issued U.S. Dollar LIBOR-linked Securities to Term SOFR As Replacement Reference Rate after June 30, 2023

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TEN, Ltd. Announces Date of First Quarter 2023 Results, Conference Call and Webcast

Quiet Days Continue

Yesterday was kind of flattish in the income issues marketplace–some issues up ,some down–although some of the regional bankers took a pretty large leap up.  Customers Bancorp (CUBI), Valley National (VLY), Zions (ZION) and others saw their preferreds jump 2-8%–no particular reason for the jump except time has passed and each day that passes without a collapsing bank signals a potential end to the ‘crisis’.  On the other hand–in a giant overreaction, Allstate (ALL) preferreds tumbled with the announcement of a new preferred issue.

Today I see the 10 year treasury is at 3.48% this morning which is 2 basis points below yesterday’s close.  I am thinking we continue to see rates in a narrow range until the debt ceiling issue can be resolved so things should be flattish for the balance of the month.

Home Depot (HD) earnings were out this morning and comparable store sales were down–is this a proxy for the economy?  Certainly it is meaningful for home building and home improvement – I have no answer but these pieces of information add talking points to recession speculation.  We will have retail sales ex automobiles released here in a few minutes and this will add a little more color to the recession (potential) story.

I won’t be doing anything again today except potentially going ahead and buying either the new Allstate issue OR one of their currently outstanding issues.  I sat on my hands yesterday.

Allstate Prices New Preferred

Allstate Corporation (ALL) has priced their new noncumulative preferred stock.

The issue prices at 7.375% for 24 million shares.  The issue is noncumulative, but qualified.

As expected the issue is investment grade at BBB from S&P and Baa2 from Moodys

The issue will trade OTC grey market today under ticker ALLJV (at least to start)

The pricing term sheet can be read here.

Headlines of Interest

Below are press releases from company’s with preferred stock or baby bonds outstanding–or just news of general interest.

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Harbor Custom Development, Inc. Reports 2023 First Quarter Financial Results

Diana Shipping Inc. Announces Time Charter Contract For m/v Medusa With ASL

Oxford Lane Capital Corp. Schedules Fourth Fiscal Quarter Earnings Release and Conference Call for May 16, 2023

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Costamare Inc. Reports Results for the First Quarter Ended March 31, 2023

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Sachem Capital Revenue Increases 42.8% to $14.7 Million for the First Quarter 2023

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Pyxis Tankers Announces Financial Results for the Three Months Ended March 31, 2023 & $2.0 Million Common Share Re-purchase Program

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Fortress Biotech Reports First Quarter 2023 Financial Results and Recent Corporate Highlights

View Press Release

Chicken Soup for the Soul Entertainment Reports First Quarter Earnings in Line With Guidance

View Press Release

OFS Credit Company Provides April 2023 Net Asset Value Update

Allstate to Issue New Preferred Stock


Giant property and casualty insurer Allstate (ALL) has announced a new issue of preferred stock.

The issue will be a fixed rate issue and will join a number of issues already outstanding which can be seen here.

Thanks to EarlyBird for the heads up.

The issue is expected to be rated BBB/Baa2–investment grade. Coupon should be between 7.375-7.625%–pretty tasty. The issue will be non cumulative, but qualified.

The preliminary prospectus can be found here.

Monday Morning Kickoff

Last week the S&P 500 barely moved closing the week at 4124 which was off just 12 points from the close the previous week–.2% loss on the week.  The range for the week was incredibly tight as well at 4098 to 4154.  The closer we get to June 1 the more likely this market takes a tumble (debt ceiling).

Interest rates closed at 3.46% (the 10 year treasury)–which was about 2 basis points higher than the close the previous Friday.  The range of trading was a bit wider at 3.34% to 3.53%.

The Fed balance sheet fell by $60 billion last week as maturity runoffs and bank crisis funding repayments are driving the balance sheet back toward the early March level.

Last week we had the consumer price index (CPI) and the producer price index (PPI) released with both at or a little below forecast.  This means a couple check marks in the ‘pause’ camp for a potential Fed Funds rate hike in June.  Plenty of data remains to be seen in the next 3 weeks or so.

This week we do not have much in the way of major economic news – lots of secondary in importance items and lots of Fed yakkers so I suspect we may look back on this week and say it was a tight trading range once again.

Last week the average $25/share preferred and baby bond stabilized (kind of) from the previous weeks drubbing – average share off 14 cents, investment grade off 11 cents, banks off 59 cents, mREITs off 3 cents and shippers up 9 cents.

Once gain no new income issue priced last week.