The Bank of New York Mellon (BK) will be selling a $1,000/share preferred issue. No listing of these shares will occur. The preliminary prospectus is here.
The bank will be redeeming their series C 5.20% $25/share issue which can be seen here. This issue has been redeemable since 2017–it is likely the redemption date will be 12/20/2020 as it must be redeemed on a dividend payment date.
It is surprising that a bank with a credit rating this high Baa1 and BBB took this long to redeem these shares–investors were lulled to sleep as shares closed last Friday at $25.87 so will take about a 50 cent loss on the redemption.
Eugene pointed this one out.
The new BK issue is now tradable with last sale at 99.5. for a YTW of 3.72%. YTW is lowest of current yield, YTC and reset yield at present 5yT. As bad as it is that’s the best BK issue in the market right now.
Bond desk or IBKR.
I am not a buyer.
This is a tragedy, the redemption of BK-C I mean. I sold off half my position last week but did get skinned on the rest.
This leaves one of the premier financial outfits in the U.S. with no exchange traded anything. They do, however, have 4 non-exchange preferred issues, soon to be 5. The new issue will be a 5-year reset, paying quarterly, which is very rare among non-retail issues. It won’t come with a big coupon but if you like great safety, the reset structure, and a low initial base for the reset, this is the issue for you. Buy from bond desk once it gets a CUSIP. Or buy on IBKR directly.
The Series G, which was issued just months ago, already trades at 107.
Bob, how will this new issue be sold if, as the prospectus says, it will not be “listed on any securities exchange or automated quotation system”? Do brokers buy directly from BK and then make shares available to their clients?
So once I have the CUSIP I’d call the fixed income desk and see whether my broker can obtain it?
And how would I sell it (as, when and if)?
Bur
The term sheet is out
https://www.sec.gov/Archives/edgar/data/1390777/000119312520277019/d71005dfwp.htm
The rate is a painfully low 3.7%. That’s what you get with a BBB+ rated QDI preferred.
It will not be exchange traded but it may be bought through the bond desk where you trade. Give them the CUSIP from the term sheet. It may take several days to “break syndicate” before it can be bought.
At IBKR you can enter an order directly on the platform, at your own bid price, once it becomes available. You don’t have to pay the thieving bond traders spread.
Trading 5.2 for 3.7; mon dieu.
Does IBKR show price action (bid/ask) to guide my bid? (Forgive my laziness; I guess I could go poke around there myself.)
Re the drop to 3.7: yowch.
Meant to add that I don’t have an IBKR account (although one may be in my future)…
Yes.
Bob-in-DE
Sorry to lose BK-C also. I picked it up a squeak over par so I’ll just let it run out to get the last divie, as I didn’t know last Friday in time to sell at $25.87.
But there’s TFC-F, also a bank holder, coupon at 5.20%, and 3 yrs past 1st call, that I rotated into today at $25.35. BBB- on the PFD, but senior secured is A3 by Moody’s. It’s not Mellon, but a good one.
Are folks not buying SPG-J? Lots filling today between $64.82 and $65.50; yield is 6.43% (coupon 8.375%) in a Moody’s (not on watch) long-term debt rated Baa1. 1st call 2027. I don’t know the rating on the issue, but would imagine a BBB-/Baa3 at this point.
I feel your pain on BK-C.
On SPG-J, just make sure you are also aware of YTC. I’m showing it at 3.62%. With an 8.375% coupon it’s going to be called unless it’s a very different world in 2027.
Bob-in-DE,
You got it.
Thanks.
TFC-F is one of those bank preferreds that’s only callable on dividend payment dates, so with the 30 day notice requirement you’ve only got a couple of weeks and a couple of pennies lower until you’re home free/ risk free of call until 3/1/21. Interesting with TFC-O with its 6/25 call trading at 27.35…