4/6/2025
Our site runs on donations to keep it running for free. Please consider donating if you enjoy your experience here!
North Carolina banker First Citizens Bancshares (FCNCA) has priced their new issue of non cumulative preferred stock.
The pricing is at 5.375%–higher than I anticipated. The issue is rated Baa3 (investment grade). Interestingly this issue has just a 1.30% underwriting discount which indicates to me that with the coupon the underwriters believe this will be an early sell.
Shares will trade immediately under OTC Grey market ticker FCIZP.
I have tried to do some buying on investment grade issues this week and until today had little luck. But now we are seeing some issues moving larger volumes which is giving one a chance.
I had a GTC order in on the 5.25% Ellsworth Growth and Income CEF preferred for a few days and it has executed on a ‘dump’. My price was $25.50. Just a small couple hundred as I already had a position and a better opportunity may arise–so reset a lower GTC order. This is a Moodys A1 issue–and in spite of the name is a Gabelli Fund.
I also bought a small position in Prospect Capital baby bond (PBB) 6.25% as it tumbled all the way to $25.02. This investment grade issue is callable NOW and matures in 2024.
For the really brave the lodging REIT preferreds are being pummeled and I see issues of quality companies like Pebblebrook (PEB) 6.375% perpetual (PEB-E) selling in the $23.xx area. And of course there are many more.
So buy small and keep a little money at the ready–who knows what tomorrow brings!!
Equity markets remain pretty wild as everyone trys to figure out the longer term effects of the corona virus.
For us income investors it means a little more time to try to find some bargains. It seems everyone is trying to play the same game–maximize quality coupons with a little call protection. Quality issues over say 5.25% with a few years until potential calls are trading over $26 or $27–or even more and I have trouble pulling the trigger on these–but maybe there will be no choice.
I went ahead and added a little bit of the MVC Capital 6.25% baby bonds (MVCD) yesterday at $25.29. I did this with the knowledge of the partial call on 3/26–I already held a position so just added to it–I see it popped late yesterday to $25.56.
I am watching mostly (not all) investment grade issues right now–will try to add a few hundred shares here or there–hopefully with a little call protection, but it seems reasonable given my cash situation I may park in some issues without much financial call risk even if they are currently callable.
We are awaiting the pricing on the new preferred issue from First Citizens Bancshares (FCNCA) as it was not priced yesterday–which mcg noted in yesterdays comments.
It will have a permanent ticker of FCNCP when it does trade on the permanent exchange. It will likely trade OTC Grey market 1st, but the ticker has not been announced.
As Bob P noted if the coupon is decent (above 5%) this issue may trade hot out of the gate–but we will wait and see.
As pointed out by readers in the last couple of days there have been a couple partial calls of baby bonds by 2 BDCs.
Capital Southwest Corp (CSWC) today has announced a call of 1.4 million shares (just under 50% of shares/bonds outstanding) of their 5.75% Notes (CSWCL) Due 2022. The partial call will take place on 4/3/2020. Shares closed at $25.40 today.
MVC Capital (MVC) has announced last week that they will call 800,000 shares of their 6.25% Senior Notes (MVCD) due 2022–this is less than 20% of the baby bonds outstanding. The call is for 3/26/2020. These shares/bonds closed at $25.56 today.