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.

115 thoughts on “Bond Discussion”

  1. Anyone else hold the Energy Transfer Series H 6.5%Inst Pref that was issued last June? CUSIP 29273VAN0.
    Did you get short changed on 5/15 dividend?
    I remember they warned when bought it at Vanguard the 11/15 divi end of last year would be for just 5 months..and they got that amount right. This tme, got the same amount for a full 6 months…. looks ike they didnt adjust. The payment type also change from interest to dividend according to Vanguard…but they have struggled with this and EIX and all other Inst Prefs for that matter,,
    Is it better to go straight to the issuer in these cases, rather than the broker? Called ET Investor line and left message…

    1. Vanguard fixed income looked into it and it was an incorrect payment from ET. They will be receiving the correct amount May 23, and our accounts should be corrected May 25.

    2. Just bought 200 PEMEX oil bonds, a little under par at 98 (Petroleos Mexicanos 6.875% matures 08/04/2026, YTM 7.25%) . Rated BBB. Kinda like a Papa-Bond!

      There is a $10 fee for each bond at Schwab, ouch!

      1. Payday Investor – I’ve used both Vanguard and Schwab to buy bonds in the past and Vanguard normally has pricing that is a little better. Also, they only charge $2 per bond, which I find to be very reasonable. Vanguard shows them with a split rating of Ba3/BBB.

        1. BTW, it looks as though the price for this bond if purchased @ 7.25% YTM would be over 98.60. I see one trade yesterday for 200 at a price of 98.14 which YTM was 7.398 according to Fidelity.

        1. Well read and understood. PEMEX is by default backed by the Mexican government as it is too BIG to fail. Anyway I would take Moody’s BBB rating any day over Fitch. Notes are due in 2026 and the petrol industry is having a earnings feast for god knows how long.

          1. Payday, the issue has always been the enormous debt that Pemex has racked up, being in corrupt Mexico and the excessive want for the Mexican Federal government to control operations.. As long as people do their own deep due diligence and understand the risk, then as we say in Latin tegere culi omnibus sumptibus, Azure

            1. it’s a leap of faith — a four year leap of faith! I wouldn’t go more than a year or two out of them, knowing the risk.

  2. I bought some EIX at $890 today. The 5-year reset plus the 4.698% margin is pretty good. If it is called, I’m also happy.

  3. Southern (SO) has some junior subordinated BBB- debt in $1000 issuance that matures in 2024 and 2027. These are on same level cap stack as the SOJE and SOJD etc. baby bonds they have issued. The latter have higher yields but are long dated maturities while the below are shorter duration. May be worth tracking. I am only watching for now myself.

    1. Grid—my only account is at Schwab. When I call the bond desk and ask for an offering price (usually 25 bonds), they usually call me back with a quote that is 1-1.5 points off the current finra price. In your experience, is that normal? Also, sometimes they say plus $25 or $50 commission or sometimes it appears to be built into the quote. Thanks

      1. Randy, by “1-1.5 points off”, do you mean “1-1.5 points worse from my standpoint”? With Vanguard I’ve observed it’s more like 0.5-1 points worse. With IBKR, I see the same pricing I do at Finra. Also, IBKR lets me place limit orders for bonds.

        1. Bur, Vanguard has ZERO markup on muni or corporate bonds, just a separate $1.00 per $1000 bond charge. I also find their muni bond inventory is the largest I have found and it is easy to buy bonds on their web site. All the very best, Azure

          1. Randy, just to add, many of the FINRA trades we see are dealer to dealer trades that will invariably be lower than what we get a shot at. I only dabble in this area, but I always assume I am going to be paying more than what FINRA shows.

      2. Randy, corporate and muni bond trades are very different from stock trades. If you want to buy stock XYZ, you normally see the exact same bid and ask prices at all brokerages. This is called the National Best Bid & Offer aka NBBO and is by design.

        Individual bonds do not trade the same way. There is no standardized bid and/or ask prices that all brokerages show. Some brokerages build their commission into the price you see. Others do not. Others add a “markup” but do not call it a commission.

        The other aspect is that different brokerages show different inventories. So you might be able to buy XYZ at one brokerage but not at a different brokerage. Fidelity for example, is well known for not letting you buy bonds they consider higher risk.

        Last year when we were buying some of the EIX preferreds, I noticed some people were paying 1.0 to 2.0 MORE IIRC than we were at the exact same time with similar quantities.

        I do not know of a concise, one size fits all answer about which brokerage is best for buying bonds. In the last three trading days, we have purchased individual bonds from three different brokerages. If there was one brokerage that had all of the bonds at the best price and markup and commission, we would have bought all of them there, but that was not the case.

    1. I noticed this 7 5/8% issue due 2030 is being done to call in 4.45% senior notes due in 2023. Admittedly I have not looked into this at all but the purpose smacks of desperation….. the kind of thing that a company thinks would be wise to take the money and run while it’s offered and use it before it’s no offered anymore to put off near in debt payments.

    2. Carpenter is rated B2/BB+ and the market clearly believes Moodys over S&P. Earnings have been negative for the last 7 quarters. They’re a specialty manufacturer of high-tech metals components primarily for Boeing and Aerbus. My suspicion is that they will continue to have problems due to being squeezed by inflationary commodity prices for nickel and titanium, and reduced demand from these customers when we go into the next (upcoming?) recession. Looks too risky for me now, although I’ve owned their bonds in the past.

  4. For people looking at resets, one should watching pricing of the EIX 5.375% $1000 preferred that resets in 2026 to 4.69% plus 5 year. If it reset today the 1.47% 5 yr would equate to a 6.16% at reset off par. I know of no ute preferred with that future yield possibly with exception of the perpetually suspended PCG preferreds. I bought 10 more today albeit at $103.97 so that would work out to a 4.3% YTC which isnt bad with the upside protection if not redeemed. I wish I had bought these with the others I bought under par at IPO last spring.
    I would much rather buy something like this than a 4% ish ute perpetual today. But then again predicting the future is hard because its dealing with the future, so who knows…..

      1. Bur, the reset component obviously eventually provides protection down the road for an issue. But if rates do bump up some more it will be interesting to see how the US resets trade on that in comparison to the Canadian counterparts. The Canadian ones trade basically as if the future reset rate is the current rate. Meaning they cratered hard when rates fell even when they had years of call protection with a higher yield…And vice versa… The US resets are still in their infancy. And early results appear to show they trade more like they are a fixed preferred at current yield. It will be interesting to see how they trade as they mature a bit in this market.

    1. Hi Grid, would you please give the symbol for the EIX preferred you mentioned? I could not find it on QOL. Thanks.

      1. MFZ, They have 2 now. I will give you both to track in case one hits your mark.
        Here is the most recent newly issued 5% reset. Cusip… 281020AT4
        The initial dividend rate on the shares of Series B Preferred Stock from and including the initial issue date to but excluding March 15, 2027 (the “First Reset Date”) will be 5.00% per annum. On and after the First Reset Date, the dividend rate on the shares of Series B Preferred Stock for each Reset Period (as defined herein) will be a per annum rate equal to the Five-year U.S. Treasury Rate (as defined herein) as of the most recent Reset Dividend Determination Date (as defined herein), plus a spread equal to (i) in respect of each Reset Period commencing on or after the First Reset Date but before March 15, 2032 (the “First Step-up Date”), 3.901% (the “Initial Margin”); (ii) in respect of each Reset Period commencing on or after the First Step-up Date but before March 15, 2047 (the “Second Step-up Date”), 4.151% (the Initial Margin plus 0.25%); and (iii) in respect of each Reset Period commencing on or after the Second Step-up Date, 4.901% (the Initial Margin plus 1.00%). See “Certain Terms of the Series B Preferred Stock—Dividends.”

        The one I own is the 5.375% issued last spring. Cusip is 281020AS6
        They also have book level bid and ask spreads. Typically the smaller the purchase the higher you pay. I dont know if you can call in a bid or not. I just accepted what I could get at call in. You also have to pay the accrued dividend just like one would buying a bond.

        1. Grid, Do you have concerns about EIX with respect to wildfires and lawsuits like the ones that hit PCG?

          1. Kapil, short answer yes, so I reflect that in my purchase amount. I only own 25 shares of the EIX reset, otherwise, I would own a lot more, ha.
            CA, has a tendency to cut the legs off their utilities, then get a doctor to sew them right back on. Odd concept. But that $20 billion dollar shared utility insurance fund really protects against that next big fire.
            EIX is in better financial shape than PCG. They had a big fire damage themselves and yet still raised the common dividend after it. CA has turned into natural gas haters and electric car lovers. Plus the state is presently trying to put the screws to the homeowners with solar panels and cutting their benefits and increasing hook on grid costs. This are all favorable trends earnings wise for the company too.

    2. Grid, What is the CUSIP for this issue? I am having a hard time locating it for a quote at TDA? Definitely worth adding to my watch list.

  5. I have a floating rate Bond tied to the LIBOR…bond matures this year in august. I’ve heard they will continue to post LIBOR until March of 2023…anymore info on the LIBOR replacement for floating rates and has anyone jumping in on any floatingrate issues? Seems like a good optioon with rates inching up a bit.

  6. 18 month Bond purchase idea..yielding over 9%
    PBF Logistics (PBFX) 6.875% Coupon Matures 5/15/23
    Just bought 10 at 96.50 thru Vanguard
    Cusip: 69318UAB1
    Its an Oil/Gas/Energy MLP but its KRIS rated default probability is 0.51%.
    Can think of worse places to park cash for now,,,

    BTW Huge thanks to Gary Hargreaves who donated me 30 mins of his time to go over Corp Bond Investor services, KRIS etc..much appreciated. Currently doing the free trial where you get a daily spreadsheet… Slim pickings, but still stuff to be picked at

    1. PBFX’s fortunes are closely tied to it’s major customer, PBF, where it gets ~80% of revenue. PBF has been losing money hand-over-fist. What does KRIS say about PBF?

      1. Here’s another idea for a 2023 bond. Greenlight Capital Reinsurance (GLRE) Cusip 395366AB3. They lost a ton of money in a scandal several years ago but appear to have fixed things now. Unrated by Moodys/S&P but BBB- at AM Best. I bought some several days ago. Offer price is 96.25 at ETrade, YTM = 6.485%. Please do your own due diligence here. KRIS opinion?

      2. Coaster
        Few days late, but KRIS estimates PBF 2025 bond default prob at 2.3%. So significantly higher, but that bond is a 7.125 and trading in the 60s.
        That’s a real dice roll. Prefer the PBFX
        Can’t find any KRIS rating on the GLRE BTW but doing some DD right now. Thanks for tip! Maybe we can share more in this space.

        1. Adrian –
          Thanks for the info and I’ll let you know if I find any more deals. I bought some Targa (87612BBE, 2/1/27, Ba1/BB+) at a YTM = 4.674% on Wed. but its gone now from the market. I think the lower 5.375% coupon (as compared to their other callable bonds) will protect it from calls.

          Merry Christmas – Coaster

        2. I keep thinking that sooner or later it will come to me what you mean by “KRIS,” but so far, that light hasn’t gone on yet….. Spare me from wasting my dwindling brain power any further, please….. What is KRIS????

          1. Kamakura Risk Information Services. I think they came up with their own classification and rating system on probability of a company going bankrupt. I read up on their system maybe 5-6 years ago… and havent followed them since. I simply look at companies profit, loss, revenue, etc.

            1. Thanks, Mr. C. Even had I set my brain power machine on overdrive would it have helped me come up with that one…. I’ve never heard of Kamakura before…….

              1. 2WR, you probably need to visit KRIS in person to assess them. They are based in Honolulu. After Covid dies down (hopefully), sounds like a deductible business expense to me. . .

            2. A buddy sent me this bond to look at a couple months ago, so I’m familiar with it.

              I’ve never heard of KRIS but when I see a 7.125 bond trading in the 60s, I know the default probability is very high. The company appears to be one oil spike away from bankruptcy. They have insufficient liquidity to weather a surge in feedstock costs. If the parent goes bankrupt, there’s a good chance they will take the MLP with it.

              “I simply look at companies profit, loss, revenue, etc.”

              Those are important metrics but always remember they are backward looking and the past isn’t always indicative of the future.

              1. For indications for the future, I have heard that thousands of times for traders trying to convince other investors in a turn around company. They point out that all the bad results and history is not indicative of the future, and hence, the company will turn around because of some late cash infusion, or some late tech innovation that will turn around the company and will affect the books in the near quarter.

                But, for analyzing whether a company will go bankrupt or not, looking to the past quarters, and all the past history will keep you out of deep water. I would think that it is an extremely rare occurrence, where a company has been profitable for many years, and then has had 1 bad quarter, and then they went into bankruptcy. Then we chalk that up to … “welp, I guess I should have predicted some future event that consumed all their cash reserves, consumed all their assets, … How do you think Kamakura predicts bankrupty? off future?

                1. I agree companies don’t go from profitable to bankrupt in one quarter but that’s not the scenario I’m concerned about. I’m more concerned about a company’s financials deteriorating and then the price of my security going down. Then you’re faced with the choice of selling at a loss or riding it to possible further deterioration. Bankruptcy may take years but the price of the security will start incorporating increased bankruptcy risk the moment that risk starts to increase.

                  A good example are CBL and WPG. Bankruptcy took many years to actually happen but the price of their preferreds and bonds reflected increased bankruptcy risk far before that. One may have bought them when things looked fine based on past metrics but then one was either forced to sell at a loss when the numbers deteriorated or ride it to bankruptcy.

                  However, what I’m saying mainly applies to high yield, not IG. IG bonds mainly trade on rate risk as credit risk is low.

                  1. High yield almost always comes paired with high credit risk. A lot more due diligence to the books is necessary and the historic trend. You can get ideas from Rida over the years with high yield and high credit risk. He does not have anyone on his staff that can do this, and hence little analysis makes it in his articles. If it does, it is not based on sound financial analysis. It is more of an expressive language and lacks details. Anything high yield should be in a short term trading horizon. There is no free lunch.

  7. FYI….
    Bought WFC.L at $1489 for 5% yield.
    Not thrilled with the yield, but will park this for income. The issue is considered broken as it can’t be redeemed unless WFC common hits near $200.

  8. Does anyone else own IStar bonds? I see this filed on EDGAR –

    It states, “iStar Inc. reported that it has commenced a solicitation of holders of its outstanding 4.75% Senior Notes due 2024, 4.25% Senior Notes due 2025 and 5.50% Senior Notes due 2026 to clearly align certain provisions of the indentures governing the notes with the potential sale of the Company’s net lease assets, as the Company continues to execute its stated corporate strategy to grow its ground lease and ground lease adjacent businesses and simplify its portfolio through sales of other assets….” I have received notice from Fidelity that I have to vote by Oct 28 and will receive a “solicitation fee” of $10 per $1000 bond if I consent, HOWEVER, there’s no information as to what it is I am voting for. It tells me what is NOT being altered [“The propose amendments do not modify principal or interest payable on the notes”], but it doesn’t tell me what is being altered. How am I supposed to know what I’m giving up by consenting? Has anyone else received this or any additional information? I own all three of these iStar bonds. This seems very vague and oddly worded imho, as if they don’t want to share the facts unless forced to. I’d also like to know the consequences if the alterations are not passed.

  9. Vistra (NYSE:VST) announced a new $2B share buyback program and the pricing of a private offering of 1M shares of its 8% Series A Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock at an offering price of $1,000 per share.
    The annual dividend rate on each share of Preferred Stock is 8.0% from the original issuance date to, but excluding, Oct. 15, 2026.
    The company will receive gross proceeds of $1B from the sale of the Preferred Stock before.
    The offering is expected to close on Oct. 15.
    The company intends to use the net proceeds to repurchase its common stock beginning as early as early November 2021.
    In addition, Vistra’s board adopted a new $2B share repurchase program, effective immediately, superseding its prior $1.5B repurchase program, which had ~$1.33B of remaining authorization.
    Any thoughts?

    1. It is interesting. Power company. Had a disaster in TX during that storm. Appears to be on track to recover into positive earnings. Is that the typical 1000 preferred but in reality will be sold as 25?

      I would have to read up more on it but it has some potential for the higher risk bucket. Definitely better then a HDCI 😐

  10. We bought 8% Broadband $1000 bond now it up $1500. What should we do hold or sell . 5yrs of interest

    1. Here’s what I might do, assuming that I was willing to hold to maturity and assuming that I believed the issuer would not default (disclaimer: this is not a recommendation to hold or sell, and I am no expert):

      – Calculate the present value of holding to maturity (which I know based on future interest payments and principal returned at maturity).
      – Is that PV greater than what I would realize by selling today?
      – If yes, hold; else sell

      1. correction: “Estimate the present value of holding to maturity (which I infer based on future interest payments, principal returned at maturity and an assumed discount rate).”

        1. Bur and Georges,
          FWIW, I find the XIRR function in excel helpful in the NPV calculation.

          1. If you bought AVGOP, you bought $1000.00 of Broadcom preferred stock and $500 of Broadcom common stock..
            Prospectus is here:
            Here are the conversion terms.
            if the stock tanks, the preferred stock goes down with it.

            Unless earlier converted, each share of the Mandatory Convertible Preferred Stock will automatically convert on the second business day immediately following the last trading day of the settlement period into between 3.0303 and 3.5422 shares of our common stock, subject to anti-dilution adjustments. The number of shares of our common stock issuable on conversion of the Mandatory Convertible Preferred Stock will be determined based on the Average VWAP (as defined herein) per share of our common stock over the 20 consecutive trading day period beginning on and including the 21st scheduled trading day immediately preceding September 30, 2022, which we refer to as the “Settlement Period.” At any time prior to September 30, 2022, holders may elect to convert each share of the Mandatory Convertible Preferred Stock into shares of our common stock at the minimum conversion rate of 3.0303

              1. It was a joke… The $1000.00 preferred stock he is referring to has no option to pay cash at redemption, it pays shares in all cases.
                So the reason it is trading at 33% over par is because of the underlying share price of the common.
                If the common tanks, this preferred goes with it.

  11. As a bond dummy, I was reading where Arizona and other states are/will be getting rid of their Unilever bonds. Forgetting politics and solely from a monetary standpoint , wouldn’t this be similar to stocks and the high selling possibly depress the price (assuming there isn’t the same demand)? I can’t figure out how it really hurts the company when it’s already issued and they have the funds, other than possibly in the future that there are less buyers for future bond issues.

    1. Dufus,
      With regards to a number of states and certainly including AZ, they have to sell in order to comply with state law(s). Totally agree with the moves… To determine how it affects the pricing of the bonds, you have to dig into how many have been issued/what overall $ amounts we’re talking about. What has already been sold might not even move the needle and you also have to consider that Unilever may at any given time, change course with how they are going to deal with this issue from these anti-Semites. BJ has their own BOD, but they are under the UL umbrella. So who knows…

      UL’s common stock is ~ the same price today that it was 4yrs ago. Their earnings and revenue have been going backwards for a number of years. Not hard to wonder why, IMO. ESG and BDS initiatives surely have changed the world of investing.

  12. A bond-market preferred, First Midwest Capital Trust (320870AA6), is on offer at YTM = 4.973%, maturity 12/1/33, rated Baa3/BB-. Moodys seems more on top of it with a recent positive credit watch. Their subordinated debt is Baa2/BB+ and financials look good, IMHO. I just bought some.

      1. The document does seem to call them “6.95% junior subordinated deferrable interest debentures”, but I really didn’t try to read thru it all. My posting was quoting Etrade, which called them Trust Preferreds. I just looked up the CUSIP on FINRA, which says the Bond Type is “Trust Preferred Capital Security”.

        1. That just means the denomination was created from a larger security, and isn’t indicative of a preferred stock.

          1. OK. The bottom line is that I’m happy with my purchase, in today’s market, and plan to keep it to maturity.

  13. Tim, I second (third? fourth?) the suggestion to rename this sub-thread to “$1000 issues” or “Institutional Issues”.

  14. A sampling of institutional preferred issues, all either investment grade or close. No garbage in this list. Not much yield, either. Generally not suitable for me in the present environment but may be suitable for others.

    Check the price charts on some of these issues (at FINRA). Some sold at 60-70% of face back in April 2020. 40-50% 1-year returns.

    I know people will look at the yield figures. The most important column is actually Column M. This column pretty much determines what I would buy and what I would avoid. Will explain later but if anyone wants to take a stab please do.

    Take note of COF Series E. It’s the only live floater included. It’s effectively a 3.91% yld cash sub with no call risk (meaning you lose nothing if called, not that it can’t be called).

    The spreadsheet is copyrighted but I grant a royalty free license to anyone (with the following exception) for personal, non-commercial use. No license is granted to any person or entity affiliated in any way whatsoever (other than solely as a reader or subscriber) with HDO from Seeking Alpha.


    1. I tried to access the spreadsheet using my Google account and got to an Access Requested page but haven’t gotten an email with the access code. Is something else needed?

    2. Thanks for posting, Bob. I’ve requested access to your sheet. Please be on the lookout for the request.

  15. Does anyone know of a good free site for programmatically accessing bond prices? is fine for manual quotes, but it has some cookie stuff happening that I haven’t been able to work around with lynx/wget.

    1. David – I hope someone has an answer to your question because right now it’s all manual. What you can do to ease things a bit is make a watch list at FINRA and with that you can return up to 50 prices at a time rather than one at a time. 50 is the maximum but that is per browser. I keep lists on 3 different browsers so I can see up to 150 prices simultaneously.

  16. I see we are still living with the misleading title of “Bond discussion”. I will post notwithstanding.

    Here is an institutional note issue from Arbor Realty;

    This is a back door issue, meaning it’s the registration of an existing non-registered issue that came with demand registration rights. This is a common scenario in the institutional market.

    I believe the issue will become tradable, on certain platforms, at the end of August, after the exchange offer expires.

    This is a SENIOR note, 5% coupon, no adjustments, maturing in 2026, with limited callability. I estimate it will trade such as to result in a YTC of about 4%. It may be suitable for someone with a 5-year time horizon who wants to be sure of getting his principle back when those 5 years are up.

    Won’t be me but it may be you.

  17. One question that arises is how liquid institutional aka $1,000 face value preferreds are compared to the $25 par issues we usually discuss. I decided to take a snapshot at a single time this afternoon to compare. I captured the bid and ask prices to be able to calculate the “spread” both in dollars/cents and in percent. Understand that this is a single datapoint and bid/ask prices change a gazillion times each day. So if you retook the data at any other time, the answer likely would turn out differently. It is beyond the capabilities of my TRS80 to calculate these numbers for all issues for all times during regular market hours.

    The $25 data is based on 508 “high quality” preferreds/babys. High quality in this sense means that it is currently paying the dividend and has an average daily trading volume of >= 2,500 shares. Stated differently, the data does NOT include any of the Grid issues that we would typically classify as “illiquid.”

    The results:

    Bid/ask spread Percentage of $25 issues

    1 to 5 cents 37.4%
    6 to 10 cents 28.7%
    11 to 15 cents 11.8%
    16 to 20 cents 8.3%
    21 to 128 cents 13.8%

    Median bid/ask spread cents= 7
    Median bid/ask spread percent= 0.27%

    For comparison, I used 67 ~US preferred holdings from the actively managed preferred ETF ticker FPE.

    Median cents= 600 aka $6.00
    Median bid/ask spread percent= 0.53%

    So if you had commission free trades on BOTH, the $25 issues have a substantially lower spread. However, I am not aware of any platform for $1,000 issues that has commission free trades. If you pick the “wrong” brokerage, you can pay both a commission PLUS a wider spread than I have stated. Best case, I would assume you pay $1.00 per $1,000 face, so that adds roughly 0.1% both for buying and another 0.1% for selling. So a more accurate bid ask spread percentage for $1,000 issues is roughly 0.73% which is close to 3X more than the $25 issues.

    Another factor is that small investors often times do NOT meet the minimum quantity to buy at the listed bid or ask. It is common to have bid and ask sizes shown of $500,000. When you try to buy say $25,000, many times the buyer/seller will NOT fill your order with that “small” quantity. You might have to raise you offer price to find a seller at that quantity.

    BOTTOM LINE is that you should plan on having wider bid/ask spreads when dealing in the $1,000 issues. This makes “flipping” a little more difficult, although buying to hold should be fine. Also note that this whole set of $25 does NOT include ANY of what we would consider illiquid issues. Obviously the spread on those often times is substantially more than the 0.27% from this data.

    1. Tex, my limited forays and call ins reflect your assessment. But I did get a great deal on the EIX reset though I am certain that was because it was a big IPO dump from underwriters.
      Bob has stated before he gets better spreads on Interactive Brokers so that can factor in also. Plus there are times where I can narrow the bid ask spread myself on $25 bonds. I cant do that one $1000 exchange.

    2. T2 – pls continue to do the research and report findings. I offer some thoughts to round out yours.

      If one is going to trade institutional issues with any seriousness I strongly urge doing so at IBKR. (Buy once and hold forever doesn’t matter so much). One just needs to know that Buying “bonds” (which includes preferred) at IBKR is different than buying off other bond platforms and different than buying exchange traded issues. There is a learning curve but it is worth the effort it in my experience.

      Let me address the bid/ask and spread issues. If you’re buying an exchange traded issue (not OTC) at IBKR or any other broker and see you a bid/ask quote, trades should execute at those prices. The same is true for non-change traded bonds bought at all the platforms I am familiar with EXCEPT IBKR.

      For example, if I go to Vanguard, input a CUSIP, and it returns a bid and/or ask, I can transact at those prices. (There may be multiple bids/asks at different quantities but the price is still the price). I don’t have the option to input a bid of my choosing. I either take or leave what’s there, or I try back later.

      It’s different at IBKR. The bid/ask you see is an indicative price, not a true bid/ask. Even if you input an order at the bid or ask it may not execute. But more importantly, you have the option to input a price of your choosing, without regard to what bid/ask are showing. Your trade may execute, at your price, immediately, or hours or days later.

      To use a made up (but typical) scenario, I go to IBKR as a buyer, input a CUSIP and see indications of 100/100.5. I check recent transactions at FINRA and see recent trades have gone off as low as 99.75, or 0.75 below the indicative ask. I put in a bid for 10 shares at 99.75. Nothing. I let it sit a while. Maybe all day. Maybe it executes and maybe it doesn’t. But it often does.

      Or, I may leave the bid at 99.75 and up the quantity. All you see on the platform is the one indicative bid/ask but behind that are multiple dealers and there is clearly either a machine or a human making decisions. Often, I will get the shares at my price by upping the quantity. And at a meaningful price improvement over what I could get at Vanguard.

      In the end, at IBKR, you really don’t know what the true bid/ask is because the quotes shown are indicative only and may vary with quantity, unlike exchange quotes.

      I have gotten to short term trading at IBKR. I won’t name names but I will tell tell you that I’ve done so by going to much bigger trades on the buy side. I have bought as many as 100 bonds at a time and sold them off within days (sometimes same day) at a meaningful profit.

      Worth noting that commissions at IBKR are 1 buck per bond up to 10 bonds then 25 cents per bond after that. A 100 bond buy costs me 32.50. I don’t need price improvement to cover that cost.

      I would never try trading institutionals at any other brokerage. The spread and commissions would be too much to overcome I think.

      1. Bob – that’s an interesting trading platform at IBKR that I hadn’t heard of before. If you input the same CUSIP for a very liquid bond at IBKR and Vanguard at the same time, how does the indicative bid/ask compare to the listed bids and asks on Vanguard? If you enter a bid/ask on IBKR does it show up on Vanguard? I can enter bids or asks on Fidelity but they never show up on my other account at Etrade and I suspect that Fidelity keeps them in-house. Also, they expire at the end of the day.

        1. Coaster asks: “If you input the same CUSIP for a very liquid bond at IBKR and Vanguard at the same time, how does the indicative bid/ask compare to the listed bids and asks on Vanguard? ”

          Coaster, bonds are very different from stocks regarding bid/ask prices that show at different brokerages. Listed stocks have universally true bid and ask prices for all brokerages at any given point in time. It is called the NBBO (National Best Bed and Offer.) So other than commissions, the price you pay/receive should be identical regardless of which brokerage you use.

          There is NO NBBO for bond markets or universal way for them to display bid/ask prices. Each brokerage has to decide on their own how to “route” bond orders. There are two large ATS (Alternative Trading System) Market Axess and Tradeweb that transact most of the retail corporate bond trades in the US. Think of these as being electronic versions of the NYSE for bonds. For most corporate bonds, there is no physical “pit” where they are traded, orders are all “matched” electronically.

          When you submit an order to buy/sell, the brokerage has an algorithm decide how to route the order. First they might try to fill it from their own inventory, if that does not “Fill”, they might route it out to Market Axess or Tradeweb or XYZ. The brokerage has an algorithm decide what bid/ask prices/quantities to display. Here is where it is tricky. As 2WR and Bob have said, some brokerages build in a commission to the prices they display. Others add a separate commission above and beyond the bid/ask prices they display. There is no universal rule.

          A few months ago I posted one day of trading details for the CoreCivic (CXW) preferred CUSIP 21871NAB7. What prompted that study was I kept seeing trades that were outside of the bid/ask prices I was looking at. Say the bid/ask I was seeing was 100/100.5. I would routinely see trades occurring at say 99.0 and 101.5 while the bid/ask was unchanged at 100/100.5. It is impossible to say what brokerages were doing those trades. All you can see is after the fact what trades were consummated at the FINRA website.

          Commissions for bond trades are called “concessions,” but I have called them commissions in this post. Some brokerages have clearly stated commission policies so you know up front how much you are going to pay. IBKR does NOT have a policy. You never know until the trade is done how much you will pay. IBKR charges different commissions depending on where the order gets filled in addition to the quantity. Small quantity fills get hit the hardest. You might submit an order for 50 bonds ($50k) but only get filled for 1 or 2. The highest commission I have seen is $8 per bond (0.8 in price) when only 1 got filled. There is NOT a way on IBKR for you to set a minimum buy/sell quantity, so you have to hope you get a larger quantity filled.

          BOTTOM LINE is that as others have mentioned, buying from the “bond desk” takes more time and is more complicated to make sure you are not getting fleeced.

          1. Tex – Thanks for a very complete summary. I know that Etrade connects me to Tradeweb, I see that on the screen when they log me out. Fidelity retail, I believe, routes to National Financial Services and I’m not sure where from there. I’m aware that there’s variable places where small markups are added to the bid/ask before I see it. At least at Fidelity & Etrade I know what the commission will be above the bid/ask. If the trade goes thru I’ll always get the price and quantity I want. IBKR sounds quite different, and I’m interested in hearing how they work.

            Sometimes I’ll see a bid or ask from the same broker on both platforms but with somewhat different pricing and/or a different minimum quantity. I’ll know they’re from the same broker if the quantity is some odd number. When I want to buy something I always check both platforms for the best pricing and minimum.

            Ten bonds is a big purchase for me, most of my trades are less than that. I’m mostly a buy & holder, so fees don’t affect me as much as a trader.

        2. Coaster – IBKR will trade many more CUSIPS than will Vanguard.

          When markets are open I will give you some live comparisons of IBKR and Vanguard.

  18. Thanks to Tim for setting this up. For Bob-in-DE, I agree with your comparisons and would like to see your postings on specific issues.

    None of my postings are a recommendation for anybody to buy or sell anything, please do your own due diligence.

    In the bond market, I mostly shop fixed-rate corporates in the BB to BBB ratings range out to about 2043. Most below this are too risky for me, and there’s little yield above. The big Kahuna of yield and uncertainty in this range is Pemex/Petroleos Mexicanos (Ba3/BBB). Yields can be over 7%. Moodys rates it as stand-alone, and S&P assumes implicit support from Mexico. The market seems to be at a B range. I own a full bucket from years ago.

    Prospect Capital (Baa3/BBB-) is a big issuer in this space. There’s two bonds with higher coupons (74348YP39 & 74348YR94) that are pegged to par and you can get 5% until they call them. I own the P39. I also own 74348TAT9, which is make-whole, but its thinly traded.

    Recent purchases include PDC Energy (69327RAJ0, Ba3/BB, 5/15/26) at a YTM = 4.86% and Transalta (89346DAE7, Ba1/BB+, 3/15/40) at YTM = 5.11%.

    I also own some variable-rate bonds and preferreds, will post later about them.

    1. Just got a notice from Fidelity today that my P39 Prospect Capital is being called. Bummer.

  19. Even though there hasn’t been a corp bond worth buying in at least 6 months, I think it will be valuable to have this section still focused on corp bonds.

    1. Another way to think of it, is do we want discussion of $1000 preferreds clouding up the other boards? It’s probably not of interest to most people.

      The name of this board is confusing, though. Baby bonds will presumably still be discussed on the other bonds and this board should really be for par $1000 securities that trade by CUSIP.

  20. Glad to see this new section.

    I’ve been hearing that par $1000 intitutional preferreds may be cheaper on average than retail $25 preferreds. I’ve seen a couple instances of that with the EIX par $1000 preferred (which I’m long) and the ET preferred (where I’m looking for an entry). So, I decided to start digging deeper.

    I’m using FPF’s holdings to find $1000 preferreds. It can be hard to make comparisons as many par $1000 preferreds are fixed-to-floating or fixed resets but I found a couple where I can make reasonable comps to the par $25 world and so far they don’t seem particularly cheap. (note: prices are from a few weeks back when I did this analysis):

    1) Citigroup Series D, 5.35% coupon, BB+ rating (CUSIP: 172967GR6). Price: 103.66 with a May 2023 call date. YTC is about 3.4%. This preferred is comparable to the Capital One preferreds. While this compares well to the 5% COF-I trading at 26.80 with a 12/2024 call date (YTC = 2.1%), I’d rather own the 4.375% COF-L trading at 25.30 with a 9/2026 call date.

    2) Huntington Bancshares Series G, 4.45% fixed until 10/2027 then resets at the 7 year Treasury + 4.04%. Price: 107.74 (equal to 26.90). This is mostly comparable to HBANP with a 4.5% coupon and 4/2026 call date. Main difference is HBANP is fixed while the Series G resets in 2027 at a nice spread and 1.5 years extra call protection. HBANP’s price, though, is lower at 26.25.

    However, this is just two random samples I took. I’d be interested if others have a feel for whether institutional prefs are currently trading cheaper on average than retail prefs. If they are, the next question is how to search and screen $1000 prefs.

    1. Thanks for the specific examples, LI (and Bob-in-De to come I’m sure). To be honest, I’ve never tried to buy a 1k preferred via CUSIP # although I’ve been active in 1k bonds always…. I’ll need to experiment to see just how difficult or easy it is to put orders in at Fidelity and/or TDA. If it requires 30 minute phone calls, I’ll pass..

      1. 2WH

        I do my bond purchases online via TD Ameritrade.

        Click first on Research and Ideas then go to the Advanced Search of Bonds and CD’s.

        I think their search engine works best if you have the exact name of the firm. Also, the search defaults to investment grade , so sometimes they have inventory of non-investment grade issues that do not come up.

        When purchasing, you can place a limit order of ~0.9985 of the quoted price. When selling, you put out a request for bids and replies come back within a couple of hours. If you like the price, you click yes.

        I normally use this site to ensure I’m not getting fleeced.

        1. Added thought, Greg. When one is perusing an issuers bond selections on your Finra link, look at the maturity date. If it shows 3999 as maturity date of bond, its a $1000 preferred stock. They list on initial screener as a bond, but you have to tag the actual bond link to see it being identified as a preferred.

          1. Certainly correct on the 3999 date but more than a few of the listings when opened incorrectly identify preferred as some specie of bond. As always the definitive source of info on what you’re looking at is the prospectus or similar filing.

          2. is there a trick to searching by date?
            I just get a drop down calendar on FINRA and not an easy way to change to 3999.

            1. Sorry Justin. I only stumble onto them by pulling up a specific company and then scrolling through each of the companies offerings to find them.

        2. Greg – My experience is with TDA and Fidelity and to a small degree with ETrade but now I only have a dormant account at ETrade…. Unquestionably imho Fidelity offers a far more flexible and extensive bond platform than TDA. Unless things have changed (I’ve not even looked at TDA’s bond platform recently) what TDA shows you is not that actual best bid or asked available in the marketplace – they show you the price you can buy or sell at TDA with them acting as principal not broker…. That means they show you marked up or marked down prices without actually disclosing the amount of their baked in profit based on the bid/asked you’ve been shown.

          At Fidelity, not only are you shown the best bid and best asked for each issue shown, you are given the option to put in a bid or asked of your choosing and then your bid gets shown in the overall marketplace at a price that reflects their $1/bond flat commission. So it’s very similar to placing limit orders on stocks, baby bonds or $25 preferreds. And as far as asks, you’re not limited to then putting your bonds out for a bid for you to sell what you own. You can set your price and they will list it for you in the marketplace, with $1/bnd commission included. So my experience, which does not include Bob’s fav, IBKR, favors Fidelity by a wide margin. I’ve never tried IBKR, though. Also, BTW, I believe Fidelity has a maximum commission of $50 and they may have lowered their minimum to something like $2 only or perhaps eliminated it all together, I’m not sure….. Bottom line, unless TDA has recently improved their platform there are much better platforms out there, especially if they are still acting as a principal… I don’t remember if TDA does this too or not, but Fidelity also shows you full depth of market on each issue so you can see how liquid the market is on the issue you’re following.

    2. LI – I will give this more time when I have more time but the short version is this.

      Retail issues and institutional issues from the same issuer are almost never apples-to-apples comparisons. Compared to retail issues, institutional issues are usually or often:

      1) senior in rank.

      2) have honest floating rate or reset provisions (no built in rate drops at time of issue).

      3) have better call provisions, including “make-whole”, a provision almost never seen in retail.

      4) have meaningful covenants.

      5) trade with greater liquidity, often at tighter bid-ask spreads.

      6) make good cash subs (past call, floating rate, pinned to par)

      There is also the issue of availability. Many issuers have gone entirety or mostly to institutional issues. Some issuers have never issued paper into the retail market and must be bought institutional if at all. If you are after a nice, BBB rated preferred from BNY Mellon, you better think institutional. Mo more retail issues but 5 in the institutional market right now.

      Before I go: if the folks here are interested in Institutional preferred and note issues I will post. SO SPEAK UP. If there is no interest I have better thing to do. I could be writing another letter to the SEC, for example.

      1. I’m certainly interested. If you have any spreadsheets with issues you track that you’re willing to share, that would be much appreciated. Hard to get info on these issues.

        1. I can probably dig up the prospectus for 80-90% of the institutional preferreds, if they were issued in the last 5 years.
          Just out of curiosity, is there any broker’s that completely botch these? Pay as interest, bad cost basis, etc?

      2. Bob, my anecdotal observations through the recent years seems the public vs. institutional can ebb and flow where the value resides over time. Here is 2019 regulatory testimony from Southern Ca. Gas and their assesment of preferreds in 2019 at institutional level. This appears to dictate capital allocation decisions for companies via debt or preferred avenue.
        As stated above, at this time, SoCalGas does not anticipate issuing any new or
        retiring any Preferred Equity during this Cost of Capital cycle. Despite a downward trend in bond rates, the relative cost of preferred stock has increased significantly in recent years. This increase in the cost of Preferred Equity is due to a shrinking buyer base that has severely limited demand for traditional institutional utility preferred stock. In recent years, SoCalGas has been successful in issuing Long-Term Debt at relatively low costs to fund its large capital investment plan, thus reducing the need to rely on Preferred Equity. Accordingly, SoCalGas proposes reducing the authorized Preferred
        Equity ratio to the current recorded ratio of 0.40%.
        As far as seniority, each prospectus needs to be analyzed to see what the specific details are. As ones I am familiar with are typically equal standing. But there definitely can be various stack levels of preferreds and of course whether parent or subsidiary issuing can affect that also.

      3. “Before I go: if the folks here are interested in Institutional preferred and note issues I will post. SO SPEAK UP. If there is no interest I have better thing to do. I could be writing another letter to the SEC, for example.”

        Assuming these are not too difficult to buy (ideally online), I would be interested

      4. Always very interested in the 1k Institutional issues. Would not have found or had access to the EIX and ET opportunities earlier in the year without the great info provided here. So yes, big proponent of this new area of the forum.

      5. I would certainly be interested in receiving more info on institutional debt issues. I’m more of a long term holder.

      6. Me too, Bob. You post, I will read. SEC already has plenty of issues to not investigate.

    3. Agreed that I’d love to see more info on the $50/$100/$1000 preferreds. Yes, there’s a link to them from the “Preferreds” menu at the top (, but as noted, the list is incomplete. It has WFC-L, but not BAC-L or USB-A. It’s missing the former-sandbox SLMNP, though that sad situation may mean it should remain off the list. We all appreciate Tim’s wonderful diligence and limits of time for the site, so it’s certainly understandable if these don’t make the cut of important things that could be done.

  21. Apple just came out with 4 tranches of new bonds. I love this one. 2061 maturity with a coupon of 2.85%. NO THANKS.

  22. Let the first comment here be a suggestion. Most of the issues in this category will, in fact, be preferreds, not bonds. The list of preferreds I follow has 107 entries. The bond list about 10.

    Names do matter and I can see potential readers skipping past the topic believing it to be solely about bonds when their interest lies elsewhere.

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