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.
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7/9/2025
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Found a better way to monitor if any of my FHLB bonds will be called. https://www.fhlb-of.com/ofweb_userWeb/pageBuilder/call-schedule-84
Hoping that my 6.125% bond will survive the call tomorrow.
CUSIP 3130B4FJ5
Anyone have any experience with puttable/survivor option bonds?
Based on what I’ve read, it appears I could purchase way out of the yield curve at a discount, get a current yield well above any CD or short term rate I can get, and have the put option intact when the estate gets constructed.
This seems pretty attractive, since they are priced at CY 5.4 (e.g. 85 on a 2045), and they realization of the put offers an additional gain.
cheers,
jb…
Puttable/survivor option bonds are a decent estate planning investment…issue dependent. I used them situationally in the work-a-day…too much moosh and shtus for me these days. Before you jump solidify your intentions…fully understand the issuers offering parameters, redemption limitations and default stipulations. If you wanna have some fun and test your estate lawyers mettle have them run a BSM(Black-Scholes) analysis on the issue for projecting outcomes. Good luck….
A look around had me with real limited issues for puttable bonds: Dow, VZ, BoA, GS, C, Rural Electric.
I am not opposed to owning the regular shares of those, so I guess the bonds might be fine, but too much concentration could be bad.
The CYs were 5-6.5, with several trading in the 80s, the spreads were terrible. I saw one that was a misspriced odd lot of 8, so I bid it, and the order wouldn’t fill and they repriced it, which is, well, annoying.
@innovetiveincomeinvestor community:
I have an argument with my broker, IBKR, regarding the tax treatment of the land O’Lakes 8% perp (ISIN: USU51299AD43, CUSIP: U51299AD4).
So my question to the community is: Is it a preferred security or a corporate bond?
I tried to find its SEC registration document or its IPO prospectus to confirm its classification, but there is nothing out there.
costasco,
According to Chat GPT, it’s a bond. It pays interest, not dividends. Should show up in your 1099-INT section (not 1099-DIV).
Chat GPT couldn’t find the prospectus. It suggest speaking with the company IR department:
https://www.landolakesinc.com/our-impact/investors/
4001 Lexington Ave. N.
Arden Hills, MN 55126-2998
800 328 9680 / 651 375 2222
@mbg. Thanks. I wrote to the IR and hope for an answer. All my sources show it as a bond, but Fitch classifies it as preferred in their ratings.
For me, being a non-US citizen or resident, the difference is between a 0% (bond) and 30% withholding tax (preferred), so worth fighting for.
You’re welcome, costasco.
I see now that Chat GPT can make errors. I checked again and now it says it is equity.
Good luck with the IR Department. If they don’t have the offering materials, maybe the legal counsel for the private placement has it:
https://www.dorsey.com/clientachievements/land-o-lakes-rule-144a-offering
S
Great advice mbg, thanks a lot.
Definitely don’t rely on what AI says without verifying the sources. I recently googled a couple company names together and it told me they had merged and one bought out the other. I reviewed the sources. Didn’t make sense to me. So I asked why, it told me because company X was selling company Y’s products now. Its basis for saying that? A NEGATIVE search result for “Y’s product” on X’s website. Somehow X’s website returning a search saying it doesn’t understand the search and suggested a different word that might have been meant to be searched for instead of Y’s name was sufficient for the AI to think the companies had merged.
https://cbonds.com/bonds/155113/ maybe will lead to more info
S&P shows but I cannot verify CUSIP #
Land O’Lakes Inc.
Regulatory Disclosure
Issue: US$315 mil 8.00% cumulative redeemable pfd st ser A
S&P Global Ratings’ regulatory disclosures (PCRs) are published as of a point-in-time, which is current as of the date a Credit Rating Action was last published. S&P Global Ratings updates the PCR for a given Credit Rating to include any changes to PCR disclosures only when a subsequent Credit Rating Action is published. Thus, disclosure information in this PCR may not reflect changes to data within PCR disclosures that can occur over time subsequent to the publication of a PCR but that are not otherwise associated with a Credit Rating Action. Note that there may be instances where the PCR reflects an updated Ratings Model version in business use as of the date of the last Credit Rating Action although use of the updated Ratings Model was deemed unnecessary to produce that Credit Rating Action. For example, this may occur in the case of event-driven reviews where the event being assessed is considered to be not relevant to running the updated Ratings Model version. Note also that, in accordance with applicable regulatory requirements, S&P Global Ratings evaluates the impact of material changes to Ratings Models and, where appropriate, issues revised Credit Ratings where necessitated by the updated Ratings Model.
@2wr
Thanks. S&P and Fitch refer to it as a bond, cbonds and finra show it as a preferred.
I am inclined to trust the rating agencies on this one –
Perpetual security. it is preferred stock sold under Regulation S to non-US investors. So it looks like withholding tax on the dividends is the correct treatment.
Chat GPT needs to be taught US tax law that the abbreviation “perp” means it is NEVER a bond…
it is literally right in the name…
“land O’Lakes 8% perp (ISIN: USU51299AD43”
Er…what about BEPH?
Brookfield BRP Holdings (Canada) Inc. 4.625% Perpetual Subordinated Notes
Also not a bond…
They sent me a copy of the prospectus. Yeah, it is clearly a preferred stock.
Page 99
Non-U.S. Holders
Distributions on the Preferred Stock
Distributions treated as dividends as described above under “U.S. Holders—Distributions on the Preferred Stock” paid to a non-U.S. holder of the Preferred Stock will generally be subject to withholding of U.S.
federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.
Are you saying that this is not the prospectus for BEPH??? https://www.sec.gov/Archives/edgar/data/1533231/000119312521111866/d31499d424b5.htm
This seems to clearly say it pays interest…
I own all these – BNJ BEPH BIPI BEPI
and they all pay qualified dividends
there are a few brookfield “notes” that don’t pay qualified so you have to pay attention – like BIPJ or BNH, for example
not sure if that was in question here or not…
Thanks, Z – I guess the devil is in the details because diving deeper, even though the prospectus says they pay interest, there is this on S – 42
Characterization of the Notes for U.S. Federal Income Tax Purposes
No authority directly addresses the U.S. federal income tax treatment of an instrument with terms similar to the Notes. The Issuer believes, and the discussion below assumes, that the Notes will be treated as equity of the Issuer for U.S. federal income tax purposes. This characterization will be binding on a holder of Notes, unless the holder expressly discloses that it is adopting a contrary position on its U.S. federal income tax return. This characterization, however, is not binding on the IRS.
Payments of Interest
In general, the gross amount of each payment of interest on the Notes will be included in your gross income as a dividend to the extent paid out of the Issuer’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Subject to the discussion below under “— Passive Foreign Investment Company Considerations,” to the extent that the amount of any such payment exceeds the Issuer’s current and accumulated earnings and profits, it will be treated first as a tax-free return of your tax basis in the Notes, and to the extent the amount of such payment exceeds your tax basis, the excess will be treated as capital gain.
Interest payments made with respect to the Notes that are treated as dividends for U.S. federal income tax purposes generally should be taxable to non-corporate U.S. Holders at the preferential rates applicable to long-term capital gains if the dividends constitute “qualified dividend income.” To be eligible for these reduced rates, such holders generally must hold the Notes for more than 60 days during the 121-day period beginning 60 days before the applicable interest payment date and meet other holding period requirements. Assuming such holding period requirements are met, a payment treated as a dividend generally will be qualified dividend income, provided that, in the taxable year the payment is received, (i) the Notes are readily tradable on an established securities market in the United States and (ii) the Issuer is not treated as a PFIC for such taxable year or for the preceding taxable year. See the discussion under “— Passive Foreign Investment Company Considerations.” The Issuer has applied to list the Notes on the NYSE, and therefore expects that payments with respect to the Notes that are treated as dividends will be qualified dividend income, but there can be no assurance that the Notes will be listed and actively traded on the NYSE. Amounts paid with respect to the Notes will not be eligible for the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations.
2wr, thank you for the prospectus.
Now I see your comment – you beat me to it by 10 minutes!
For US individuals, the interest on BEPH is a dividend (and QDI if meeting the holding period requirement). See “CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS”, beginning on p. S-41. Here is an excerpt:
Payments of Interest
In general, the gross amount of each payment of interest on the Notes will be included in your gross income as a dividend to the extent paid out of the Issuer’s current or accumulated earnings and profits …”
…
Interest payments made with respect to the Notes that are treated as dividends for U.S. federal income tax purposes generally should be taxable to non-corporate U.S. Holders at the preferential rates applicable to long-term capital gains if the dividends constitute “qualified dividend income.” To be eligible for these reduced rates, such holders generally must hold the Notes for more than 60 days during the 121-day period beginning 60 days before the applicable interest payment date and meet other holding period requirements.
Costasco Your LandoLakes cusip: U51299AD4 comes up on my screen as a hybrid capital security which would mean it has bond features with an equity twist. The income could be a perpetual/term/reset mixture of interest and dividends. The most common types of hybrids securities are preferred stock…toggle notes…convertible bonds. Good luck figuring the tax treatment on this one
@yahhey
Thanks. See also my response to @mbg above.
IMHO the key difference between a bond and a preferred is in the obligation to pay distributions (interest / dividends), whether contractually obliged under all circumstances (and a cause of default, if omitted) or at the discretion of the management.
Unfortunately, I cannot trace the prospectus or the term sheet of the security to clarify it’s nature.
@costasco I would suggest you look up the vagaries of hybrid capital securities before you plunge. I’d invest elsewhere unless you are really into butter.
My 6.125% agency bond survived the call date. Over the past 2 weeks, not seeing any new issue above 6.1%
CUSIP 3130B4CH2
Issuer Name FEDERAL HOME LN BKS
Maturity Date 12/24/2054
Coupon Rate 6.125%
For anybody interested. Moody’s BAA3, SP BB. I am doing some further research.
Dentsply Sirona Inc
Callable 06/30@100 – Fixed to Float – 8.375% FIXED until 09/12/2030 then 5YR CMT + 437.9BP – Conditional Calls
Cusip 24906PAB5
Moody’s has a negative outlook. This is junior subordinated debt. As a dental supply manufacturer has some diversification possibilities.
A 5 year chart of the common stock price shows a falling knife.
Reading through the 10-q, the company has manufacturing facilities in Israel,
and will be greatly affected by any tariffs imposed on or by the EU.
Sales are down and management analysis seems gloomy on the economies of quite a few countries, chief among them Germany.
I’m sure I left a lot out.
“Uncertainty ” is my summary of the 10-q
I agree. This will be a pass for me.