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Community Banker Dime Community Bancshares to Sell Preferred

Brooklyn based community banker Dime Community Bancshares (DCOM) will be selling a new issue of non-cumulative perpetual preferred shares. The issue will NOT be investment grade.

DCOM is a relatively small banking company with total assets of just $6.3 billion so this offering will be interesting relative to pricing.

DCOM has posted a presentation on the company which can be read by interested potential investors–it is here.

This issue should trade on the OTC grey market, but no ticker has yet been announced yet.

The preliminary prospectus can be found here.

mcg was right on this new issue.

Addition of a “Sock Drawer” Section

I have added a new topic in the right hand side menu for “Sock Drawer” discussion.

The intent it to include items that all of us consider “sock drawer” holdings.

My definition of “sock drawer” is those issues I own that I consider extremely safe and that don’t have to be watched too closely. Normally they would have more modest coupons, but you can sleep well at night (relative to safety)–you know the income stream is extremely safe, althought the share price may move around quite a bit.

Others may have their own definition–in fact I know they do–that is fine

For instance, I have held the Tricontinental 5.00% preferred (TY- or TY-P) issue for years and years. Tricontinental is a closed end fund managed by Columbia Threadneedle. TY was formed in 1929 and this small amount of preferred stock is the only leverage the fund uses–2.2% leverage. Because it is a CEF they must maintain a 200% asset coverage on the preferred stock–the last time I calculated the coverage it was over 4000%. This is a $50/share issue and last traded at $54.66. The issue is callable anytime at $55/share. Shares were issued in 1963.

You can use the link in the right hand menu to access this section–it is here.

Capital One Prices Giant New Preferred Issue

The previously announced preferred stock issue from Capital One Financial Corp (COF).

The non-cumulative issue will carry a coupon of 4.80%.

The issue is split investment grade with only Moodys rating the issue as low investment grade.

The issue will trade OTC Grey Market immediately under ticker CPONZ.

The pricing term sheet can be found here.

Capital One Financial to Sell New Preferred

Capital One Financial (COF) will be selling a new issue of perpetual, non-cumulative preferred stock.

The issue will trade under the permanent ticker symbol of COF-J when it begins to trade on the NYSE.

The issue is likely to be split rated–investment grade by Moodys and a couple notches below investment grade by S&P.

The OTC Grey market ticker has not yet been announced–but it will trade on the OTC prior to NYSE trading.

The company has 5 issues currently outstanding with coupons of 5% to 6.20%. These issues can be seen here.

NOTE–the COF-P 6.00% issue was callable 9/1/2017 and almost certainly will be called. It was trading around $25.60–now at $25.37. The issue is only redeemable on a dividend payment date.

The preliminary prospectus can be read here.

EarlyBird was the early bird on this one.

Stocks Claw Their Way Back While Interest Rates Drift

It looks like the initial selling in common stocks has ended and shares are moving slowly higher. I would think they are in a ‘wait and see’ period. Of course this wait and see could last just hours–or days. Uncertainty will last for a while–no doubt there are more undiagnosed cases of corona virus in the U.S., but if the reports come in slowly and are modest in number things will stabilize.

Interest rates, as measured by the 10 year treasury are now at 1.62%–down 6-7 basis points today. In my opinion rates were going to this level 1 way or another—I just didn’t think it would be a virus that sent them down. Recall that rates on the 10 year were down at the 1.45% in September–so the current rate is not a new low. We all know that rates could spike way up based on inflation or many others reasons–they could also drift lower and lower. So really since I could make a case for either higher or lower rates there is no reason to change anything I have been doing for months and months–probably will have to live with a high level of cash for a long, long time.

The average $25 preferred and baby bond is off 3 cents today–so we are seeing a bit of disruption–but it was long overdue anyway. I am seeing some of the energy shippers off today–Tsakos Energy Navigation (TNP) issues and Teekay Offshore preferreds (now owned by Brookfield Business Partners) as well. For those with a taste for higher risk maybe there is a bargain being created here.