Giant banker Bank of America (BAC) has announced that they will be selling a new issue of preferred stock.
The company has 11 current preferred issues outstanding ($25/share issues) and 5 are currently redeemable–BUT these 5 are low coupon floaters with current rates of either 3% or 4% so I would be surprised to see these called. The company may well redeem some of their untraded issues or $1,000/share issues.
You can see all their outstanding issues here.
The issue will be rated BBB- by Standard and Poors and Baa3 by Moodys.
‘Yield talk’ is in the 4.625%–so if things run as they have been the coupon may be 4.50%.
The preliminary prospectus can be read here.
EarlyBird was right on this one with if you Prefer chiming in.
Just an FYI though I have next to no BAC on the books now I have had extensive exposure in the past. BAC are experts in confusing the majority of the pfd shareholders. While they may call the highest coupons with closest call dates, they may not. I held MER P wayyyy overtime. In fact sometimes BAC calls the exact opposite of what you would guess.
In other words don’t sell em unless you have other areas of interest. It’s not unusual for their pfd to go neg ytc for many many quarters
Does anyone have the temp OTC symbol for this new BAC PrO offering?
Thanks.
BACPL
Thanks Bob! Unfortunately that may be a problem for me because TDAmeritrade already has a BACpL for some BAC $1,000 notes. Not sure I’ll be able to trade it until it gets an NYSE symbol, but thanks again anyway.
John – you will be, but not until tomorrow. The symbols will be different.
Trading at 24.90 and a bit right now.
priced @ 4.375
done deal
Thanks but I’ll stick with BAC-L at a 4.9% yield and essentially noncallable.
Even at that meager coupon its the best YTW of all the BAC issues, exchange and not, except BAC-L with its 4.93% uncallable yield.
I would just buy BAC-L if I wanted BAC fixed rate preferred exposure.
YTW as I use it means YTC or reset yield (at present rates), whichever is lower. All the non-exchange traded issues are resets.
Bob-in-DE,
Is the 4.93% you and Dick refer to the float minimum of 4.00% plus the 0.50% plus the 3-mo libor, or is it the 4.00% with a below-par entry?
Thanks,
FJ
Bob-in-DE
Apologies – I confused the BML-L for the BAC-L.
You are referring to the BAC L series 7.25% trading at $1,475, yielding 4.92%?
RB–thanks–thought that could happen (1/8% lower than I figured).
BAC-C is close to its call date and is weak today. It might be on the chopping block.
You’re right Kapil–someone is at least guessing that will be the one.
Just saw SAN-B floater with 4% floor called. Just saw tender offer for SLMBP at $45 with an effective yield of 4.3% (and SLM is not a great credit). “High yield” floaters are clearly at risk of being called and BAC’s 4% floor floaters could be next.
I sometimes trade SLMBP in the low to mid 30’s. Too bad I didn’t own any now.
Tim – BAC has 8 non-exchange issues outstanding but none is callable, so this looks to be new money for BAC. All the $1,000 issues are F2F and based on the float rate would be doubtful calls in any event.
4.625% looks rich given where other issues are trading. If they are going for a billion$+, maybe.
Interesting Bob–their ‘use of proceeds’ statement includes ‘may redeem preferred shares’–just boilerplate probably
Yes, as others note above the C and the A, when callable shortly, should be goners.