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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.

Monday Morning Kickoff

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.

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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.

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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.