BDC Gladstone Investment Sells New Term Preferred

Gladstone Investment (NASDAQ:GAIN) is selling a new term preferred. Details are yet to be determined, but it will have a mandatory redemption in 2025.

The proceeds will be used to redeem the 6.75% term preferred issue (NASDAQ:GAINO) and the 6.50% issue (NASDAQ:GAINN).

Preliminary info can be found here.

We own shares in both of the issues that are being redeemed, but fortunately they are trading with only a few pennies of premium in them so there will be few if, any losses, incurred on the call.




15 thoughts on “BDC Gladstone Investment Sells New Term Preferred”

  1. Anybody going to roll into GAINM from GAINO/GAINN? 1/4 to a 1/2 point less dividend is still good money for such a short term dated security, no?

  2. Just trying to understand the value left in the securities being called. It seems to me that this press release is not the formal call notice, and there is still some additional dividend to be accrued, correct? With respect to the new issue, interest rates are lower, but isn’t there also a change the credit risk? GAIN can soon reduce its asset coverage ratio from 200% to 150%. Any thoughts on a reasonable coupon for the new security?

    1. Jacob–join the club–we have over 1000 shares of the issues to be called. No doubt I will be in on the new issue.

        1. Hi Leonard–I thought about it as I remarked yesterday, but am going to pass since it is perpetual. Some days I vacillate back and forth on the best buy for me. But it is a good issue for the safety seeking investor and likely has some upside to it.

          1. Tim, thanks for your input. I think I’ll pass also since I been a little quick on the buy trigger lately only to regret it a few days later. However, I would like to buy something soon. I got lucky and sold AHT-H recently at $24.60 and see it dropped to $23.80 after AHT’s recent earnings report, so I’m thinking about buying it again (or maybe AHT-I which is a little cheaper and pays the same div). You thought about these?

          2. I took your comment about it being a possible short-term trade and went looking for comparisons. The USB issue is rated several rungs higher than the recent KEY-F issue but that makes me wonder. KEY-F is trading below par yet was issued with a slightly higher yield. Despite the rating agency differences, KEY bank is also a high quality institution. I tend to believe that any change in economic conditions that would imperil KEY would also imperil USB. I guess perception might be worth 25-30 cents.

  3. Tim,
    Thank you for the heads up on GAIN last May. I have in my notes your email exchange with GAIN IR, which basically forecast that the current term preferreds would need to be redeemed in order to move to the lower asset coverage. Saved me from buying them above par.

    1. Hi Jay–yes I just saw that exchange with Gladstone IR and whether the leverage rules applied to old issues.

  4. Tim,
    As always, thank you for the heads-up.
    I think there may be a typo, one of the the tickers should probably read GAINN instead of GAINM. The latter is the 6.25% Series D Preferred which has a call date of 09/30/2018.

  5. From the use of proceeds section of the prospectus, says that the company will be redeeming Series B & C term preferred stock. Which are GAINO & GAINN. Do you see somewhere they were redeeming series D as well (GAINM)?

    This was expected with the upcoming asset coverage reduction from 200% to 150% and their preferred stock covenants.

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