AXA Equitable Holdings Announces Preferred Pricing

Insurance company/asset manager AXA Equitable (EQH) has posted the pricing on the new preferred stock previously announced.

The issue has priced with a fixed rate coupon of 5.25%–slightly better than what I thought it might price.

The issue is non cumulative and qualified and is a fairly large issue with 29 million shares with 4.35 million more for an over allotment.

The shares will trade on the OTC Grey market immediately under ticker AXQEL.

The pricing term sheet can be found here.

Thank you Jerry for having the correct coupon hours ago.

35 thoughts on “AXA Equitable Holdings Announces Preferred Pricing”

  1. As reluctant as many of us were to jump in for a 5.25% coupon we should note the lack of alternatives. I watch the 424s on EDGAR and what I see is many companies that are candidates for issuing preferred going, instead, for senior, non-exchange traded, notes. At much lower coupons.

    And no QDI.

    With the Fed apparently set on QE4, it’s hard to see rates going up. It’s going to take a crisis to make it happen. Which is certainly possible. The Fed is covering half the trillion dollar annual deficit and the real buyers of treasuries may just give up on them at some point.

    But it’s astonishing that we look at these kinds of deficits and not a single presidential candidate even mentions them. Like it’s a non-issue.

    So, does one capitulate to 5% yields on preferred, or wait for the crisis? Or do something in between, as I am?

    1. Who knows, Bob. Bank of Japan owns more assets than countries GDP. Our Fed is nowhere near that….Party on Garth! I own some 5% and under but judiciously and by chart action. Just bought 100 of UELMO today at $90.65 (Redemption price $104 ish) Barely over 4%, but purchase price was near 5 year price lows. Did the same thing with IPWLO in $83 range earlier this year at 5 year lows. And a few other low favs such as PPWLO also. But these dont trade like liquid issues of similar yield.
      But I dont feast on those alone, also have those on deaths door step of higher yield such as TDE and VER-F, and some nasties like LTSH and PPX for example. Toss in a few term preferreds and some Resets, and I have a nice little mishmash ragtag collection from the Island of Misfit Preferreds.

    2. Bob, maybe these 5% issues are a relative bargain after all. UEPEO ($110 redemption, 4.5% par yield) which currently last traded at $101.58 today, was trading at $115 trading average first quarter of 1945 when 10 year bond was 2.3%. And UEPEO at $115 in 1945 was already 4 years past call date. 🙂

        1. Gabrielle, yes, combine a relative small float with a issuance long ago, and these type of preferreds become illiquid. The term is “institutionalized”. Some shares will never trade until a death or corporate action occurs. A preferred typically is most liquid at issuance and then slowly becomes institutionalized unless its a huge one.
          Interestingly here is a link of all preferred stocks in 1953…The 10 year was about 2.8% then and had been pretty stable previous 10 years. Look at all the low yield preferreds… Colgate Palmolive 3.5%, Columbia Pictures 4.25%, Firestone Tire 4.25%, General Mills 5%… Very interesting list, some of which of course still trade today.

    3. I’m an investor with a portion of my money and I’m a trader with the other portion. With low rates I’m more inclined to trade and less inclined to invest.

      Politicians aren’t fiscally responsible because they’d lose votes. That’s a major flaw with planning only 4 years ahead.

      There’s something odd about the current round of FED liquidity. I suspect there already is a hidden banking crisis they are reacting to. Not necessarily in this country.

      1. Martin – I concur, very reluctantly. I would much prefer to buy 6-7% IG preferred and spend my time on the beach. But it ain’t happening. I either work the short term opps for more bucks or kiss off a big chunk of income.

    4. You try to find your in-between approach, just like you, I will not readily accept the below 5% issues as the “new norm”. Nor am I going to just change my beliefs that it’s now different and deficits don’t matter.

      I have no idea how this ends or what ends it. I suspect it will be like all endings, it will be a trigger event that nobody anticipates.

      That is why 48% of my preferred holdings are in Utility and Telecomm. Yes, they will get hit hard when the party ends but I want to be heavily geared towards businesses that have services that are essential for day to day living. Is this smart? I have no idea but I sleep better with these holdings and I am always looking to increase them.

    1. Same. At a $0.40 – $0.50 profit I will sell. I really don’t want any coupon below 5.5% with preference 6% and above. I was actually passing but at $24.85 it was good enough to take a 1/4 position.

      1. No fixed target for me I always wing it. If there’s a quick 40 cent profit I wait and see if it has more room to run. And sometimes I sell for no gain if I want the money to buy something else. False start!

  2. I was not a buyer. Not sure why it is trading at $24.85. Already 6+m shares traded.

    At that price, I brought a starter position. We add more if it pulls back

  3. I am a happy buyer at 24.8x.

    Thanks to this site, was able to get in early and snag it below par. Expect it will be trading in $25s once off OTC market.

    1. Does anyone have insights into the reason(s) that prices seem to be initially depressed once a preferred like this starts trading OTC?

          1. Tex – To generalize, when new preferreds come to the market, they come on very short notice and they are underwritten by a relatively tight knit group of investment banks who will own an $25 issue at about 24.25 (a 3% discount). Thus they’re marketed within a short period of time after announcement only to the clients of the underwriting group… Some members of the group might be willing to sell quickly at below par while still making a profit jsut to move on to their next underwriting while the general public doesn’t even know the issue exists. Once these issues are marketed beyond the original underwriting group and when a permanent symbol is visible, the world of potential additional investors such as John Q. Public buyers expands and hopefully creates greater demand… So it’s a case of sudden supply being pushed through quickly in the face of more slowly developing demand that only shows up after the underwriting is completed… Make sense?

          2. That’s right, because the underwriters are eager to dump their shares so there is an abundant supply. After they’re done then there is less supply, and more demand because a lot of investors don’t bother with the grey markets. Though I never understood why the underwriters don’t play it smart and hold out for better prices.

  4. AXQRL, at 24.88 gets you 5.34% YTC, best among insurance comps. Closest comp is ALL-I (BBB vs BBB-) at 4.74% YTC.

    Others for comparison include AHL-E at 5.21%, ATH-B at 5.09%, BHFAP at 5.08%, and HIG-H at 4.07%.

    I am a reluctant buyer at present price.

    1. I guess almost everyone is reluctant buyer after the run-up in bonds (high-yield and not) we had this year.

  5. Jumped in at 24.88 thru Vanguard.
    Feel like this is verging on Sock Drawer quality…maybe not quite
    Perhaps “Workout Clothes Drawer” quality…shove it in there, and every once in a while open it up, have a look, briefly ponder doing something with it, then decide against it.

  6. I am equally surprised and the coupon does reflect it, that this is a mixed IG issue. Low end investment grade or high end non investment grade. I thought it would be Baa2.

    I guess this business is much tougher than I thought.

    Yes kudos to Jerry for nailing this hours ago.

    1. Ratings don’t necessarily reflect market perception. Some mixed ratings trade well, some IG trade poorly. EQH is well capitalized and well run. The yield tells you the market likes it.

      1. SP IG is good enough for me. In most cases, either Moody or SP rating IG is investment grade. Exceptions do occur, e.g. CTL baby bonds, USM notes and TDS notes. These notes got 2 level downgrade. They both came back nicely. Of course, in 2008 near meltdown, Doug Le Du’s bragging none of his ever got busted. That happened only because the last BAC CEO bought all shares of Countrywide Financial so that the Feds were unable to look into the insider trading of both CEO’s. I placed only 300 shares @24.84 after having sold my RILEP, the RILE first preferred taking small profit from this go-go small brokerage which I remember that Tim M has some concern. If not filled, that is okay. I need to pay property tax on Dec 4.

        1. Got filled. The ones which I placed for sale all got sold in the last minutes, I may want to buy more AXQEL Monday hopefully at $24.85.

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