Bond Discussion

This is a page where bonds can be discussed. I am thinking primarily $1,000 issues which are of interest to folks.

Like the other discussion pages posts will stay intact for a number of months.

1,160 thoughts on “Bond Discussion”

  1. Late notice received. Lumen is buying back there 156686AM9 bond at $1000 or hold it till it matures 12/25 at 7.2%. Deadline 11/15/24 6:30 pm.
    I originally bought at $970 so not much gain.

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    1. Also 156700AZ9 LUMEN buy back at $1000 and 156686AM9 at $932.50.
      Happy with the $932.50 since I only paid $620.

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    1. Justin-
      “Floating rate based on Compounded SOFR (calculated as described in the Preliminary Prospectus Supplement), minus 0.35%”

      I didn’t look at the prospectus, but I’d guess the rate would be close to the FFR.

      Does the put turn this bond into something like a MMF? The CY might be bad at some future time, but you can get (most of) your principal back. Wouldn’t be surprised if the price quickly falls to 98.

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      1. Does anyone definitively know what today’s “Compounded SOFR” rate is? I looked quickly and unsuccessfully to find it, but whatever it is, I imagine it must have a 4 handle on it…. not much extra meat on the bone to rely on a put for market value for 50 years imho….

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            1. I think Compounded SOFR is a term made up by Gorgia Power to satisfy their needs, probably some form of hedging. Probably won’t find it published anywhere, but they do give you the formula and it appears to be backward looking so you don’t know the interest/dividend payment until close to payment date.

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              1. No matter what, I think the formula, especially taking into account the -35, means what they will be paying is not much different than money market rates….. Don’t think I’ll be jumping up and down to get in or going back to math class to figure out what the exact rate is going to be.

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                1. why would anyone buy this when they can get a FHLB security at SOFR+ a small margin?

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                  1. I kind of agree, lt, but the reason would be because theoretically the put allows you to control the maturity date for at least the first 30 years.

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  3. Florida Rail Brightline’s Riskiest Munis Lure Investors on Expansion Bet
    Railroad’s unrated muni bonds gain about 13% since April
    John Miller fills First Eagle’s muni portfolio with the debt

    Bond investors are snapping up the riskiest chunk of Brightline’s debt in a wager on the private railroad as it expands west across Florida.
    Investors, drawn by a 12% coupon, have bid up Brightline’s $925 million of unrated-tax exempt bonds so much that they’re valued at about 105 cents on the dollar. They’ve returned some 13% since April, when the Fortress Investment Group-backed company refinanced its debt with nearly $4.5 billion in muni bonds and junk notes.
    Among the reasons the unrated debt is appealing to investors: collateral. They’re secured by a lien on current and future assets including design contracts, permits, and rights-of-way that are earmarked for Brightline’s project to stretch its tracks from Orlando to Tampa.
    It’s a bet on the future of rail in traffic-clogged Florida for the first new US private passenger railroad in more than a century. With the two cities and Miami among the fastest growing US metropolitan areas, Brightline is planning to extend its trainline west connecting the state’s three major economic centers as soon as 2028.
    “We believe this to be the only debt that is secured by the Tampa route,” said John Miller, head of the high-yield muni credit team at First Eagle Investments. “This route is more valuable than the $925 million in debt and worth more than that to Fortress and the Brightline holding company in particular.”
    Read more:
    Brightline Founder Eyes Private Rail Expansion to Texas, Seattle
    Bankers Reap $15 Billion of Muni Deals From Florida Growth Boom
    Fortress-Backed Brightline Asks Investors to Bet on Florida Rail
    The veteran municipal-bond investor, who made a name for himself with his high-risk, high-return strategy, has been a long-time Brightline bull. He first championed the project while still head of Nuveen’s muni-bond investments, where he built the biggest high-yield muni fund. Since Miller joined First Eagle, the firm has bought $125 million of Brightline’s unrated debt, making it the $4.2 billion fund’s biggest position.
    And yet, it’s Brightline’s $2.2 billion of investment-grade senior municipal bonds that get paid first. Also higher than the unrated debt in the payment waterfall is $1.3 billion in high-yield corporate notes. Those trade around 91 cents on the dollar, a loss of some 4% since the refinancing, data compiled by Bloomberg show.
    Brightline hasn’t said how it plans to raise capital for the extension to Tampa, but a lien on the assets would result in a higher cost of capital. To remove the lien on the Orlando-to-Tampa project, Brightline has to buy back $500 million of the unrated munis, according to offering documents. Brightline’s financial projections include a $500 million redemption in 2025.
    There are other incentives for the railroad to refinance this debt early. The price to redeem the unrated bonds keeps increasing. The next hike on July 15, 2025 will increase the redemption price to 106 cents on the dollar from the current cost, 103 cents. It will then rise to 109 cents in July 2026. Brightline has two years after that to redeem the bonds.
    For potential investors in Brightline’s unrated muni debt, when they expect the debt to be redeemed is critical. A current buyer paying 106.5 cents may have a portion of the bonds called at 103 cents, some at 106 cents and some at 109 cents, Miller noted.
    “If a buyer’s average redemption premium is around 107 to 108 on a weighted-average basis, then in that scenario, the total return over the holding period would exceed 12% which would be very attractive in most markets,” Miller said.

    Another facet of the bond’s appeal is its scarcity value. Only $225 million bonds in the $4 trillion muni market have coupons higher than 12%. For an investor in the top federal tax bracket, a 12% coupon is equivalent to a taxable security yielding a little over 20%.
    Even though high-yield muni funds only make up 16% of municipal fund assets, investors have poured some $14 billion into high-yield munis funds this year, accounting for 44% of all inflows to municipal bond funds, according to LSEG Lipper Global Fund Flows.
    “Forty-four cents of every dollar has gone into a high-yield muni mandate this year,” said James Welch, a portfolio manager at Principal Asset Management. “That’s really the story.”
    On the supply side, a little over $20 billion of high-yield munis have been issued this year, just about 5% of total muni sales.
    Meanwhile, Brightline’s ridership has missed projections.
    The Florida trainline carried 2 million riders, or 2.7 million annualized, through the first nine months of 2024. That trails Brightline’s projected base case ridership of 4 million in 2024. Ridership on its short-distance line from Miami to West Palm Beach has fallen 38% because the railroad wants to ensure it has enough seats for higher-priced trips between Miami and Orlando.
    Still, Brightline has almost $1 billion in reserves available to service the debt on the $2.2 billion of senior muni bonds and the $1.3 billion corporate notes. Reserves are sufficient to pay debt service for two years. To boost capacity and revenue, Brightline has ordered 15 coach class cars and 10 premium class cars.
    And the muni market has shown its willingness to rollover Brightline’s debt, first issued in 2019.
    “Brightline for years has been behind projections and it never trades badly,” said Dan Solender, director of tax-free fixed income for Lord, Abbett & Co, which owned $27.5 million of the 12% munis as of June 30. “There’s definitely some market support for it, which might not exist on the taxable side.”

    I am NOT long these Brightline bonds (yet), I am Azure

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    1. Thanks for this , Azure. I’ll be looking at Brightline West when it comes to market . I’m not quite sure they have the most efficient routing, but I know I’ll use this all the time.
      I know Brightline West has factored into many Californian’s “expatriation” to Vegas. By no means the biggest factor, though.

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      1. well, I’m apparently behind as they’ve issued quite a few bonds already as I just checked emma

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    2. I know this project well. My dear friend was President and now she is in charge of the West line. Encourage all if interested to request confidential financial statements via Brightline. I give no opinion.

      For those that like these high risk look at other Fortress debt. I did great on NFE bonds and am in the 29 bonds. GMPLF and Drive Shack preferreds are also Fortress. My dear friends are savvy. (Which is why I always invest in FIG PE.) Even introduced to a local friend and now they co-own sports team.

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      1. Fortress is a lot bigger than Riley. Drive shack went BK and the preferred took a lot of investors money. I read a recent article on the railroad from LA to Vegas. Round trip Air fare from Burbank to Vegas is about $100.00. Amtrak is a little over $200.00 and takes 6 to 7 hours I think. Brightline West is expected to take about 2-1/2 Hours
        Sections will pass through federal land controlled by the Bureau of Land Management and National Park Service.
        Here is something to read with your morning coffee folks. People who forget history are doomed to repeat it.
        https://www.historyisaweapon.com/defcon1/zinnbaron11.html

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        1. Charles, Drive Shack did not go BK. It stopped paying preferreds. Wes hired an individual with relevant experience to run DS. The individual spent foolishly. Wes allowed individual to resign. Turns out the individual was manic with serious issues. The person running now is proven. Blackstone entered with a competitor similar to DS. It is a long runway to success for DS. However, there is lots of loss carryforward which is valuable to Fortress. I sold years ago but do watch this space. I like the smaller entertainment venues vs the TopGolf (which is what DS originally tried to develop). TopGolf has been a disaster for Calloway.
          As far as Fortress taking investors money, I have stated repeatedly Wes understands the public markets. I generally go with his PE deals.

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          1. Wanda, I didn’t do a deep dive on DS when I was looking several years ago. Just didn’t look good to me. My daughter worked for ClubCorp and quit when it was acquired by Apollo. Too much change and cut backs.

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  6. Does anyone know of any upcoming or recent institutional high yield preferreds that are investment grade (I am thinking of stuff like the 7.2% Citi 5 year to float offering from earlier this year)?

    Maybe there are some interesting CUSIPs that people might suggest are worth taking a look at?

    The CUSIP for the Citi issue is: 172967PJ4

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    1. YH—all the high yield ones I bought earlier this year are way up in price. I hesitate to add at prices like 104-107. Do you know of any website that posts $1000 institutional bonds? I have been looking, but can’t find any. Thanks.

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      1. YH – Check out daily holdings from the large ETFs to source ideas.
        I then plug them in IBKR or FINRA to get a sense of pricing.
        I agree w Whidbey, most have run up too much. But I have still been buying a select few near par, not knowing where rates will go.

        Check out:
        38141gb52 – Goldman
        89832qae9 – Truist
        693475bp9 – PNC

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          1. I have full position in the LNC security. Here is an interesting structure on investment grade elect utility Southern Co, SO 1000 face. 4% coupon floats 1-15-2026 at 5yr tsy plus 3.73. Can be had for under par cusip 842587DF1 fwiw!

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            1. jerrymac—regarding SO 4% issue, I can’t find that it’s a F2F issue. On Schwab and at finra, it just states it is a fixed issue. Where can I look to verify that it floats on 1/15/26? Thanks

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              1. Whidbey – I found it by googling “southern 2051 FWP.”
                https://www.sec.gov/Archives/edgar/data/92122/000009212221000043/southern2021ajsnfwp.htm

                Jerry – I hesitate to even say this as you know the market very well, and I appreciate your posts. the Cusip I listed is the capital security which is trading about 40 bps (yield) cheaper than the sub debt, I know the sub debt has been mentioned here a few times. I have owned the sub debt for a while, just picked up the capital security for the first time yesterday. The capital security ranks junior.

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                1. Little bit of confusion going on I think as there are two separate F/F Southern Co issues due 2051
                  https://www.sec.gov/Archives/edgar/data/92122/000009212220000065/southern2020bjsnfwp.htm = 4% due 1/15/51 CUSIP 842587DF1

                  https://www.sec.gov/Archives/edgar/data/92122/000009212220000069/so2020bjsnfinalprosup.htm

                  https://www.sec.gov/Archives/edgar/data/92122/000009212221000043/southern2021ajsnfwp.htm = 3.75% due 9/15/51 CUSIP 842587DJ3

                  https://www.sec.gov/Archives/edgar/data/92122/000009212221000045/so2021ajsnfinalprosup.htm

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                2. Thanx, Maine…my hole in strike zone tends to be credit vs structure. Love the color you & others provide! Best

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  8. Here is a 2WhiteRoses Special – earn a ~5.75% (guess), with a qualified div, for (approximately) a year, then it will likely get called. Actually, a true special would be a guaranteed maturity, but gotta take what I can get.

    Offered at $99.35 on IBKR now

    Truist $1,000 Par – Series P Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, 4.950% until 12/1/2025, then 5Y Treasury + 4.605%

    BBB- Rating: https://ir.truist.com/credit-ratings

    Prospectus: https://www.sec.gov/Archives/edgar/data/92230/000119312520154313/d893550d424b5.htm

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    1. Makes sense, Maine……… I’ve just been so out of touch recently, though, that mentally I don’t think I’ve adjusted to what yields are attractive these days… to do this for 5.75% ytc just doesn’t seem to be enough but again, that’s probably me being off base….. I’ve literally done nothing for weeks, not even rolled over CDs or Treasuries, not by design as much as being busy handling other things… but wait! there was one exception – yes a typical 2wr special – i bot TELZ upon notification of call… and even on that, had I been paying closer attention to this site, the opportunity was there, thanks to early posting by someone, to have bot much cheaper that morning premarket.

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  9. Treasuries have been falling seemingly every day since the last auction, where (from memory) 75+% of the auction was taken by indirects (“ferners”)
    seems like yields always rise after an auction where indirects are a huge piece.
    4.173 on the ten with 4.55 on the 19 year being the high yield.

    Top ticking with this post , most likely, but those preferreds have to have
    better entry points

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  10. SJIJ: The tender for the junior sub debt looks like a YTM in the low 8’s.
    You can buy the SJIJ 5.02’s of ’31 at 84.384 for a YTM of 8.17.
    Cusip 838518aa6
    I do not own any. There’s 5 mill on offer .

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    1. LT – I added to my stash on Wednesday, picked up 15 at $82.68. My only regret is that I had to purchase it in a taxable account.

      Regarding the risk of rates rising, I have plenty of floaters and resets. Also, I’ve been around the block w some of the smartest FI and macro managers, and rate timing is generally a low alpha trade, usually negative.

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  12. Found this on Vanguard… JP Chase new issue bond cusip 48130CTP0 coupon of 5% with maturity on 4/29 2033…1st call on 10/31/2026…pays yearly.
    My long dated ladder is full…thought this might be of interest.

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    1. Maine-
      Aren’t those CLO CEFs in the dumpster with you? Most debt doesn’t default. Good luck!

      Reply

      1. R2S Maine is looking higher up in debt stack. Not sure if something goes sideways you will still be covered. These higher risk plays with REIT’s make me nervous. The strike with is it the SAG union? Actors who do green screen and wear motion sensors for characters in video games are worried they will be replaced by AI
        Anything to do with rental property to businesses associated with the video and movie industry. They were affected with the guild actors strike.
        Same with businesses associated with supporting Boeing and all the community businesses around the neighborhood where the Boeing factories are located. Makes me wonder what would happen to the property owners if the businesses renting in industrial parks, strip malls etc went under because striking workers are not spending or Boeing cuts back

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        1. Hey Charles! I think you know more about the situation than me, just hoping for “survival” from this piglet. Joking aside, I do see some positive trends for office in general, and am willing to risk some $.. the position is less than 1%.

          BTW, have you noticed Hpp-c? It’s up to $15, or 8% current yield! It’s also a $425m issue, a decent amount of cushion if things go bad.

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          1. Hey Maine, Here are a couple if you can do like Azure or Losing trader and find a way to buy a 144a
            024747AF4, or 024747AG2,

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            1. Thanks, Charles. Always looking for new FI ideas.

              BTW, I did buy some of the Goldman Series Y 1,000 pref issue yesterday near par. 6.125% fixed to reset. Resets 240 basis points off the 10 year, in 10 years. Not bad for qualified.

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              2. @Maine I too would like the CUSIP on the Goldman Ser Y Pref with 6.125% coupon floater

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  15. New Fortress Energy. Redemption of my 2025 bonds with new restructure. Grateful as I probably had too much in this bond. Accumulating since issue. I did have a strategy based upon financials but luck always plays a part.
    Will look at remaining bonds later after the dust settles.

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  16. 2WR,

    I use Fidelity software and site for information about bonds just because the software is much easier for me to finagle. I also learned today that I was misinterpreting the coupon listing for a floating rate note like this PPL bond. The rate that Fidelity is quoting in their overview page of the bond lists the coupon rate of the last payment, but not the “current rate”, which can be quickly calculated using the forward CME SOFR that has been recently cited on this site?

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    1. I’ve often thought that there should be a place in this world where a website aggregates F/F rate issues and keeps track of and publishes the new rates for each issue the day after the new rate is calculable… Nobody does that it seems and no issuer seems to think it’s important enough for their IR Dept to put out the number immediately…. Tex, you listening??? Maybe you could use Excel to create such a site and call it floatersRus.com or something?

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  17. I am surprised and wondering.

    I own this bond (thanks to Dick Whtiman):

    69352PAC7 – PPL – floats off the 3 month plus 2.66%

    It’s time for the floating rate to reset (September 30 in the prospectus) and I recently received notice from the company through my broker (IBKR) statement:

    ….PPL Float 03/30/67 announced a coupon payment, effective 20240927. The declared rate on the coupon payment will be USD 0.02157.
    ISIN: US69352PAC77….

    This actually calculates out to a rate of 8.63%, which surprises me that it is that high. I have access to the prospectus, but I have not found the details about how the change from LIBOR to SOFR is handled.

    any comments or assistance would be appreciated.

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    1. It is now SOFR+266+26. Coupon does seem high unless the determination date was more than a few weeks ago.

      I own it too.

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      1. landlord,

        It’s odd. almost like it a three month SOFR backwards calculation…

        I still cannot find PPL’s statement about LIBOR to SOFR on its website or at the SEC… of course, it’s always possible that the note I got at IBKR is incorrect….

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      2. If the rate is 8.63%, then they must be announcing the rate to be paid on 9/30 which was set on or about June 28.

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        1. Thanks to all ..2WR ..Mr Whitman.. ..landlord

          2Wr explains it. It’s not been a good day for thinking for me. I made the assumption that the notice I got from IBKR Was the declaration for the calculation for the next three months, but it was the declaration for the payment for the past three months…

          funny, I was texting someone today and they made light of my lack of ever assuming anything (a not uncommon statement to me) which made me think of the old slogan -“assume” makes an ass out of u and me…

          Reply

          1. By extension, you now know as of today (or maybe yesterday) you can calculate the rate for the 12/30 coupon, right?

            Reply

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