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Banker US Bancorp to Sell Preferred-Updated

Solid banker US Bancorp (USB) has announced they will be selling a new issue of non-cumulative preferred stock.

This is a highly rated bank–A3 by Moodys and BBB by Standard and Poors–I am looking at a potential 3.xx coupon on this one.

The company had recently redeemed their 5.15% preferred on 1/15/2021 and now has 4 current preferred issues outstanding–1 that is a pure floater with a 3.50% coupon minimum, 1 that is 6.5% fixed to floating and 2 that are fixed at 5.5% and 3.75% respectively. You can see these issues here.

The preliminary prospectus can be found here.

EarlyBird saw this early on this.

13 thoughts on “Banker US Bancorp to Sell Preferred-Updated”

    1. You may want to check out the OTC utility preferreds. Here are some I own that you can look up on Quantum Online: NSARO, WELPM, CNTHO, PPWLM, APRDM, APRDO. There are many others. Most of these are BBB+ and have been in existence for around 50 years. Most are past call (WELPM and PPWLM are uncallable).

      1. Dick…. a while back I tried to pick up some of the older utility preferreds and they seemed to be totally illiquid….they never seem to trade. I had much more luck with the older/floating rate bank preferreds linked to Libor which were no problem to buy. Are the symbols you suggest trading at all or are they at a standstill?

        1. Richard, these are not old…They are ancient. And combined with that the floats are very small. Time tends to institionalize older issues. And many of these ilk are 60-80 years old. Some only have a few thousand shares. Take the first one NSARO. It only has a 100,000 shares and was issued in the 1950s. Most new bank issuances, for example, have millions of shares issued.
          You have to cast a wide net and know your correct entry point and dont be swayed by the high ask prices.
          For example today I bought some 1940s issued HAWLI from Hawaii Electric. Out of the blue there were some sitting there for the taking and they got sopped up quickly. Once the 1300 shares or so were bought at $20.70, the ask went to $28 with no active seller. There are old ute issues that can be had with a bit of patience at or slightly below their redemption prices and a 4.5% yield or so, if that fits into your desired area of interest. But generally you have to be realistic with your bid to get a nibble from a seller.

        2. They all move periodically. Patience is required or you can just set good until canceled limit orders. I think the ask on NSARO has been sitting around $104 for the past several days which I think is a pretty reasonable price that’s just slightly over par and you’ll get a yield of around 4.6%.

          Another is UEPEP for around $102.50 which will get you around 4.5% right at par.

          Some shares of WELPM moved today for $138. This one is uncallable.

          I think you trade liquidity for additional yield and get safer issuers. The lack of liquidity can also be a benefit at times too.

          Best of luck!

  1. If you forced me to buy a USB preferred (it would take that) it would be USB-I, AKA 902973AY2. “Trades” on the ATS, which humble retail buyers can access at IBKR.

    It’s a 3mL-based F2F that just went floating and will have a coupon for the present dividend period of (about) 3.73%. Ongoing rate will be 3mL+3.486%. Price is 99.63 to yield 3.74%.

    This is not a phony floater like USB-A/H. There is no floor and there is no ceiling. There is no built in rate drop as it has already gone to floating. No call risk as it’s trading below redemption. As such, it’s a reasonable cash sub and may also appeal to those concerned about rising short term rates.

    Personally, I’m not a buyer.

  2. Tim,
    There is also USB-Q issued last October. with a 3.75% coupon. It’s now slightly below par, so I’m guessing the new one might have a tad higher coupon.

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