Innovative Income Investor | Innovative Income Investor

Quiet Markets While The FED Meets

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.

CEF Gabelli Equity Trust to Sell New Preferred

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.

Allstate Calls ALL-A

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.

The official notice is here.

WR Berkley Prices Baby Bonds

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.

The pricing term sheet can be seen here.

Insurer WR Berkley to Sell Baby Bonds

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.